**EXHIBIT
      2.1**




Execution
      Copy


CONFIDENTIAL
        TREATMENT REQUESTED
 
 [*]
        Indicates that the confidential portion has been omitted from this filed
        exhibit
        and filed separately with the Securities and Exchange Commission




**PURCHASE
      AND SALE AGREEMENT**




**BY
      AND AMONG**




**TWIN
      OAKS POWER, LP**




**TWIN
      OAKS POWER III, LP**




**SEMPRA
      ENERGY**




**AND**




**ALTURA
      POWER L.P.**




**PNM
      RESOURCES, INC.**




**DATED
      AS OF JANUARY 14, 2006**









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          of Contents


**TABLE
      OF CONTENTS**




ARTICLE
      I


DEFINITIONS




**Page**1.1
            Defined
                Terms
            11.2
            Interpretation
            12




ARTICLE
      II


PURCHASE
      AND SALE OF ASSETS




2.1
            Transfer
                of Assets
            122.2
            Retained
                Assets and Excluded Assets
            142.3
            Assumed
                Liabilities
            152.4
            Excluded
                Liabilities
            162.5
            Closing
            182.6
            Purchase
                Price and Allocation
            182.7
            Post-Closing
                Audit of Assets and Post-Closing Adjustment to Purchase
                Price
            182.8
            Resolution
                of Dispute Regarding Closing Date Non-Transferred Assets
                List
            202.9
            [Reserved]
            212.10
            [Reserved]
            212.11
            Earn-out
            21




ARTICLE
      III


REPRESENTATIONS
      AND WARRANTIES OF SELLER, TOPIII AND SELLER’S PARENT




3.1
            Transaction
                Representations
            213.2
            Reserved
            233.3
            Compliance
                with Laws
            233.4
            Permits
            233.5
            Environmental
                Matters
            243.6
            Litigation
            253.7
            Zoning
                and Condemnation
            253.8
            Brokers
            263.9
            Contracts
            263.10
            Assets
                Used in the Operation of the Facility
            26




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**Page**3.11
            Bankruptcy
            263.12
            Reserved
            263.13
            Non-Infringement
            273.14
            Mechanics’
                Liens
            273.15
            Title
                to the Assets
            273.16
            Reserved
            273.17
            Real
                Property Interests
            273.18
            Insurance
            293.19
            Labor
                Matters
            293.20
            [Reserved]
            303.21
            Taxes
            303.22
            Intellectual
                Property
            303.23
            Capital
                Expenditures
            313.24
            Facility
                Performance
            313.25
            Disclosure
            31




ARTICLE
      IV


REPRESENTATIONS
      AND WARRANTIES OF PURCHASER AND PURCHASER’S PARENT




4.1
            Transaction
                Representations
            314.2
            Litigation
            324.3
            Brokers
            334.4
            Sufficient
                Funds
            334.5
            Bankruptcy
            33





ARTICLE
      V


CERTAIN
      AGREEMENTS




5.1
            Purchaser’s
                Acknowledgement and Agreement
            335.2
            “AS
                IS” SALE
            335.3
            Consents
                and Approvals
            345.4
            Confidentiality
            375.5
            Cooperation
            375.6
            Taxes,
                Prorations and Closing Costs
            38




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**Pag**e5.7
            No
                Recourse
            405.8
            Risk
                of Loss
            415.9
            Conduct
                of Business Relating to the Assets
            415.10
            Access
                to Information
            435.11
            Public
                Statements
            435.12
            Expenses
            435.13
            [Reserved]
            445.14
            Spare
                Parts
            445.15
            Further
                Assurances
            445.16
            Post-Closing
                - Information and Records
            445.17
            Employees
            465.18
            Review
                of Accounts Payable
            485.19
            Advice
                of Changes
            485.20
            Purchaser’s
                Parent Undertakings with Respect to Assignments
            485.21
            Purchaser’s
                Parent Guaranty
            485.22
            Seller’s
                Parent Guaranty
            495.23
            Transition
                Services Agreement
            505.24
            Notice
                of Potential Excluded Liabilities
            50




ARTICLE
      VI


CONDITIONS
      PRECEDENT TO OBLIGATIONS OF PURCHASER




6.1
            No
                Injunctions
            506.2
            True
                Representations and Warranties
            516.3
            Compliance
                with Provisions
            516.4
            Seller’s
                and TOPIII’s Receipt of Approvals of Governmental
                Authorities
            516.5
            Purchaser’s
                Receipt of Approvals of Governmental Authorities
            516.6
            Officer’s
                Certificates
            516.7
            Legal
                Opinion
            516.8
            Deliveries
            516.9
            [Reserved]
            516.10
            Title
                Insurance
            51




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**Page**6.11
            No
                Material Adverse Effect
            526.12
            Hart-Scott-Rodino
            526.13
            No
                Termination
            526.14
            Environmental
                Assessment
            526.15
            J.Aron
                PPA and Fuel Agreement
            52





ARTICLE
      VII


CONDITIONS
      PRECEDENT TO OBLIGATIONS OF SELLER AND TOPIII




7.1
            No
                Injunctions
            527.2
            Compliance
                with Provisions
            537.3
            True
                Representations and Warranties
            537.4
            Seller’s
                and TOPIII’s Receipt of Approvals of Governmental
                Authorities
            537.5
            Purchaser’s
                Receipt of Approvals of Governmental Authorities
            537.6
            Officer’s
                Certificates
            537.7
            No
                Adverse Proceedings
            537.8
            Deliveries
            537.9
            Hart-Scott-Rodino
            537.10
            No
                Termination
            537.11
            Legal
                Opinion
            537.12
            Required
                Consents
            547.13
            Environmental
                Assessment
            54





ARTICLE
      VIII


INDEMNIFICATION




8.1
            Indemnification
            548.2
            Defense
                of Claims
            57





ARTICLE
      IX


MISCELLANEOUS
      AGREEMENTS AND ACKNOWLEDGMENTS




9.1
            Survival
                of Representations and Warranties
            589.2
            Bulk
                Sales
            599.3
            Expenses
            599.4
            Entire
                Document
            599.5
            Schedules
            59




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**Page**9.6
            Counterparts,
                Facsimile Signatures
            599.7
            Severability
            609.8
            Assignability
            609.9
            Captions
            609.10
            Governing
                Law
            609.11
            Choice
                of Forum
            609.12
            Notices
            619.13
            Time
                is of the Essence
            619.14
            Termination
            619.15
            [Reserved]
            639.16
            No
                Third Party Beneficiaries
            639.17
            No
                Joint Venture
            649.18
            Construction
                of Agreement
            649.19
            Conflicts
            649.20
            Effect
                of Closing Over Known Unsatisfied Conditions or Breached Representations,
                Warranties or Covenants
            649.21
            CONSENT
                TO JURISDICTION
            64




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EXHIBITS  TITLE





A
            -
            Form
                of Assignment and Assumption AgreementB
            -
            Form
                of Bill of SaleC
            -
            Confidentiality
                AgreementD
            -
            [Reserved]E
            -
            [Reserved]F
            -
            Form
                of Special Warranty DeedG
            -
            [Reserved]H
            -
            [Reserved]I
            -
            Form
                of Fuel Agreement AssignmentJ
            -
            Form
                of PPA AssignmentK
            -
            Term
                Sheet for Transition Services AgreementL
            -
            Sempra
                Energy J.Aron GuarantyM
            -
            Sempra
                Energy Walnut Creek Guaranty





SCHEDULES  TITLE





1.1
            -
            Seller’s
                and TOPIII’s Persons With Knowledge1.2
            -
            Purchaser’s
                Persons With Knowledge1.3-A
            -
            Legal
                Description of the Site1.3-B
            -
            Legal
                Description of the Well Sites2.1(b)
            -
            Improvements,
                Buildings, Structures and Equipment2.1(c)
            -
            Other
                Real Property Rights2.1(d)
            -
            Permits2.1(e)
            -
            Emission
                Allowances and Emission Reduction Credits2.1(g)
            -
            Inventories2.1(h)
            -
            Other
                Personal Property2.1(i)
            -
            Intellectual
                Property2.1(m)
            -
            Warranties2.2
            -
            Excluded
                Assets3.3
            -
            Compliance
                Exceptions3.4(a)
            -
            Permit
                Non-Compliance




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3.5(a)
            -
            Environmental
                Audits and Reports Not Provided to Purchaser3.5(b)
            -
            Environmental
                Matters3.6
            -
            Seller’s
                and TOPIII’s Litigation3.7
            -
            Notices
                of Government Action3.9(a)
            -
            Assigned
                Contracts3.9(b)
            -
            Contractual
                Defaults or Terminations3.10
            -
            Assets
                to be Obtained by Purchaser3.13
            -
            Infringement
                Claims3.14
            -
            Mechanics’
                Liens3.17
            -
            Real
                Property Disclosures3.18
            -
            Insurance3.19(a)
            -
            Seller’s
                Employees3.19(b)
            -
            Labor
                Matters3.21
            -
            Tax
                Matters3.23
            -
            Capital
                Expenditures4.2
            -
            Purchaser’s
                Litigation5.3(a)
            -
            Seller’s
                and TOPIII’s Required Consents and Approvals5.3(c)
            -
            Purchaser’s
                Required Consents5.9
            -
            Conduct
                of Business Not in the Ordinary Course5.17(d)
            -
            Minimum
                Severance Benefit6.8
            -
            Closing
                Deliveries by Seller and TOPIII7.4
            -
            Required
                Governmental Approvals7.8
            -
            Closing
                Deliveries by Purchaser




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**PURCHASE
        AND SALE AGREEMENT**
  This
        PURCHASE AND SALE AGREEMENT is made as of January 14, 2006 (the “Effective
        Date”), by and among TWIN OAKS POWER, LP, a Texas limited partnership
        (“Seller”), TWIN OAKS POWER III, LP, a Texas limited partnership (“TOPIII”),
        SEMPRA ENERGY, a California corporation (“Seller’s Parent”), for purposes of
        Section 5.22, Article 3, Article 8 and Article 9 only, ALTURA POWER L.P.,
        a
        Texas limited partnership (“Purchaser”) and PNM RESOURCES, INC., a New Mexico
        corporation (“Purchaser’s Parent”) for purposes of Section 5.3(b), Section 5.20,
        Section 5.21, Article 4, Article 8 and Article 9 only.
  **BACKGROUND**
  A.  Seller
        and TOPIII each own certain of the Assets (as defined below), including the
        Facility and the Proposed Expansion (as both terms are defined below), which
        Assets Seller and TOPIII desire to sell and intend to be the “operating assets”
as such term is defined in Texas Comptroller Rule 3.316.
  B.  Seller,
        TOPIII, Seller’s Parent, Purchaser and Purchaser’s Parent are entering into this
        Agreement to evidence their respective duties, obligations and responsibilities
        with respect to the purchase and sale of the Assets.
  NOW,
        THEREFORE, in consideration of the respective representations, warranties,
        covenants and agreements contained in this Agreement, the Parties (as defined
        herein) agree as follows:
  ARTICLE
        I
  DEFINITIONS
  1.1  Defined
        Terms .
        The
        following terms when used in this Agreement (or in the Schedules and Exhibits
        to
        this Agreement) with initial letters capitalized have the meanings set forth
        below:
  “ Affiliate ”
of
        a
        Person means any other Person that (a) directly or indirectly controls the
        specified Person; or (b) is controlled by or is under direct or indirect
        common
        control with the specified Person. For the purposes of this definition,
“control,” when used with respect to any specified Person, means the power to
        direct the management or policies of the specified Person, directly or
        indirectly, whether through the ownership of voting securities, partnership
        or
        limited liability company interests, by contract or otherwise; provided,
        however, that a contract between a Person and any supplier of fuel or power
        purchaser does not, by itself, constitute “control” for the purposes of this
        definition.
  “ Agreement ”
means
        this Purchase and Sale Agreement, together with the Schedules and Exhibits
        hereto.
  “ Article ”
means
        a
        numbered article of this Agreement. An Article includes all the numbered
        sections of this Agreement that begin with the same number as that
        Article.
  Table
            of Contents
 “ Assets ”
has
        the
        meaning set forth in Section 2.1.
  “ Assigned
        Contracts ”
has
        the
        meaning set forth in Section 2.1(l).
  “ Assignment ”
means
        that certain Assignment and Assumption Agreement, in substantially the form
        of
        Exhibit A attached hereto, executed by Seller, TOPIII and
        Purchaser.
  “ Assumed
        Liabilities ”
has
        the
        meaning set forth in Section 2.3.
  “ Audit ”
has
        the
        meaning set forth in Section 2.7(a).
  “ Auditor ”
has
        the
        meaning set forth in Section 2.7(a).
  “ Benefit
        Plan ”
means
        all deferred compensation, profit-sharing, retirement and pension plans,
        including multiemployer plans, and all material bonus, fringe benefit and
        other
        employee benefit plans maintained by, or with respect to which contributions
        are
        made by or on behalf of, Seller, TOPIII, Sempra, or their respective ERISA
        Affiliates, in respect of Seller’s Employees.
  “ Bill
        of Sale ”
means
        the Bill of Sale, in substantially the form of Exhibit B attached hereto,
        transferring the Assets, not including the Real Property Interests, to Purchaser
        on the Closing Date.
  “ Books
        and Records ”
has
        the
        meaning set forth in Section 2.1(f).
  “ Business
        Day ”
means
        a
        day other than Saturday, Sunday or a day on which banks are legally closed
        for
        business in the States of Texas, California or New York.
  “ Capital
        Expenditure ”
means
        any additions to or replacements of property, plant and equipment included
        in
        the Assets that would be capitalized by Seller in accordance with generally
        accepted accounting principles in the United States.
  “ Casualty ”
means
        any damage to or destruction of all or any portion of the Assets, including
        without limitation, as a result of fire, lightning, wind, rain, hail, ice,
        snow,
        freezing, earthquake, earth movement, flood, or acts of terrorism, where
        the
        cost of restoring such Asset or Assets to the same quality and condition
        such
        Asset or Assets were in prior to the Casualty is likely to exceed Five Thousand
        Dollars ($5,000).
  “ CERCLA ”
means
        the Comprehensive Environmental Response Compensation and Liability Act 42
        U.S.C.ss.9601, as it exists on the Closing Date.
  “ Closing ”
has
        the
        meaning set forth in Section 2.5.
  “ Closing
        Date ”
has
        the
        meaning set forth in Section 2.5.
  “ Closing
        Date Non-Transferred Assets List ”
has
        the
        meaning set forth in Section 2.7(a).
  “ COBRA ”
means
        the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, as
        it
        exists on the Closing Date.
  2
 Table
            of Contents
 “ Code ”
means
        the Internal Revenue Code of 1986, as amended from time to time.
  “ Commercially
        Reasonable Efforts ”
means
        efforts by a Party to perform its obligations under this Agreement which
        are
        customary and reasonable in transactions of the kind and nature contemplated
        by
        this Agreement in order for the performing Party to satisfy its obligations
        hereunder.
  “ Confidential
        Information ”
shall
        have the meaning set forth in the Confidentiality Agreement.
  “ Confidentiality
        Agreement ”
means
        that certain Confidentiality Agreement dated December 14, 2005, between Sempra
        Generation and Public Service Company of New Mexico, a copy of which is attached
        hereto as Exhibit C.
  “ Direct
        Claim ”
has
        the
        meaning set forth in Section 8.2(d).
  “ Disputes ”
has
        the
        meaning set forth in Section 5.3(e)(2).
  “ Due
        Diligence Inspections and Reviews ”
means
        reviews, inspections or investigations conducted by the Purchaser or its
        agents
        or representatives in connection with the transaction contemplated by this
        Agreement and the Related Agreements.
  “ Effective
        Date ”
has
        the
        meaning set forth in the introduction.
  “ Emission
        Allowances ”
means
        all authorizations to emit, discharge or release specified units of sulfur
        dioxide, oxides of nitrogen, hydrocarbons, particulate matter, and other
        comparable pollutants, including limitations on opacity, which units are
        established by any Governmental Authority with jurisdiction over the Facility
        under (a) an air pollution control and emission reduction program designed
        to
        mitigate global warming, interstate or intra-state release, transport or
        concentration of air pollutants; or (b) any pollution reduction program with
        a
        similar purpose. Emission Allowances include allowances, as described above,
        regardless as to whether the Governmental Authority establishing such Emission
        Allowances designates such allowances by a name other than “emissions,”
“allowances” or “credits.”
  “ Emission
        Reduction Credits ”
means
        credits, in units that are established by any Governmental Authority with
        jurisdiction over the Facility, resulting from decreases in opacity or
        reductions in the emissions of air pollutants or particulate matter from
        an
        emitting source or facility (including, without limitation, and to the extent
        allowable under applicable law, reductions from shut-downs or control of
        emissions beyond that required by applicable law). The term includes emission
        reduction credits that have been approved by the applicable Texas environmental
        protection agency and are awaiting approval by the United States Environmental
        Protection Agency. The term also includes certified air emissions reductions,
        as
        described above, regardless as to whether the Governmental Authority certifying
        such reductions designates such certified air emissions reductions by a name
        other than “emission reduction credits.”
  3
 Table
            of Contents
 “ Environmental
        Laws ”
means
        applicable federal, state, and local laws governing the protection of the
        public
        and employee health and the environment, the storage, handling, and use of
        Hazardous Materials, the generation, processing, treatment, storage, transport,
        disposal or other management of Hazardous Materials of any kind, including
        without limitation, CERCLA; the Resource Conversation and Recovery Act; the
        Emergency Planning and Community Right-to-Know Act of 1986; the Hazardous
        Substances Transportation Act; the Solid Waste Act; the Clean Water Act;
        the
        Clean Air Act; the Toxic Substances Control Act; the Safe Water Drinking
        Water
        Act; the Occupational Safety and Health Act; any analogous Texas environmental
        health or safety statute; and all regulations, policies and guidances adopted
        in
        respect of or promulgated under the foregoing laws.
  “ ERCOT ”
means
        the Electric Reliability Council of Texas, Inc., a Texas non-profit corporation,
        or its successor, as applicable.
  “ ERISA ”
means
        the Employee Retirement Income Security Act of 1974, as amended from time
        to
        time.
  “ ERISA
        Affiliate ”
means
        any trade or business (whether or not incorporated) which is or ever has
        been
        under common control, or which is or ever has been treated as a single employer,
        with Seller, TOPIII, Sempra or their respective Affiliates under Section
        414(b),
        (c), (m) or (o) of the Code.
  “ EST ”
means
        Eastern Standard Time.
  “ Excluded
        Assets ”
has
        the
        meaning set forth in Section 2.2.
  “ Excluded
        Liabilities ”
has
        the
        meaning set forth in Section 2.4.
  “ Exhibits ”
means
        the exhibits to this Agreement.
  “ Facility ”
means
        the two unit lignite-fired electric generating plant known as Twin Oaks Power
        Station, located in Robertson County, Texas, taken as a whole or any portion
        thereof, but excluding the Excluded Assets.
  “ FERC ”
means
        the Federal Energy Regulatory Commission, or its regulatory successor, as
        applicable.
  “ Fuel
        Agreement ”
means
        the Fuel Supply Agreement, dated November 18, 1987, between TNMP and Phillips
        Coal Company, as amended on April 1, 1988 and November 29, 1994 and assigned
        by
        Phillips Coal Company to Walnut Creek Mining Company and by TNMP to Seller,
        for
        the purchase and sale of lignite.
  “ Fuel
        Agreement Assignment ”
means
        that certain assignment of the Fuel Agreement in substantially the form of
        Exhibit I attached hereto executed by Seller and Purchaser.
  “ Governmental
        Authority ”
means
        any federal, state or local governmental, legislative, regulatory or
        administrative body, agency, court, tribunal, arbitral body, commission or
        other
        authority (whether foreign or domestic), including without limitation, ERCOT,
        having competent jurisdiction over a Party, the Facility, or the Site, as
        the
        case may be.
  4
 Table
            of Contents
 “ Hazardous
        Materials ”
means
        any chemical, material, substance or waste that is defined, listed, limited,
        prohibited or regulated under applicable Environmental Laws.
  “ HSR
        Act ”
has
        the
        meaning set forth in Section 5.3(d).
  “ Improvements ”
has
        the
        meaning set forth in Section 2.1(b).
  “ Income
        Taxes ”
means
        any federal, state, local or foreign Tax (a) based upon, measured by or
        calculated with respect to net income, profits or receipts (including, without
        limitation, capital gains Taxes and minimum Taxes) or (b) based upon, measured
        by or calculated with respect to multiple bases if one or more of the bases
        on
        which such Tax may be based, measured by or calculated with respect to, is
        described in clause (a), in each case together with any interest, penalties
        or
        additions to such Tax.
  “ Indemnifiable
        Loss ”
has
        the
        meaning set forth in Section 8.1(a).
  “ Indemnifying
        Party ”
has
        the
        meaning set forth in Section 8.1(e)(1).
  “ Indemnitee ”
has
        the
        meaning set forth in Section 8.1(e)(1).
  “ Indemnity
        Cap ”
has
        the
        meaning set forth in Section 8.1(e)(4).
  “ Initial
        Closing Date ”
means
        October 31, 2002.
  “ Intellectual
        Property ”
means
        all patents and patent rights, trademarks and trademark rights, inventions,
        copyrights and copyright rights owned by Seller or TOPIII that are necessary
        for
        the use, operation or maintenance of the Assets, and all pending applications
        made by or on behalf of Seller or TOPIII for registrations of patents,
        trademarks, and copyrights that are necessary for the use, operation or
        maintenance of the Assets.
  “ Inventories ”
means
        coal, lignite, petroleum coke, fuel oil, natural gas or alternative fuel
        inventories, limestone, water, lubricating oil, ash, vehicles and other rolling
        stock, tools, materials, consumable supplies and chemical and gas inventories
        relating to the use, ownership, operation or maintenance of the Facility
        or any
        part thereof, but not including those relating to the use, ownership, operation
        or maintenance of the Excluded Assets.
  “ Investment
        Banker ”
means
        Goldman Sachs or its successor, as applicable.
  “ ISO ”
means
        the Independent System Operator described in § 31.002(9) of the Texas Utilities
        Code.
  “ J.
        Aron PPA ”
means
        the Master Power Purchase and Sale Agreement, dated December 22, 2005, between
        Seller and J. Aron & Company, for the purchase and sale of electrical
        energy.
  “ Knowledge ”
or
        similar phrases in this Agreement means: a Party’s actual knowledge after due
        inquiry of their respective officers and employees listed in Schedule 1.1
        or
        Schedule 1.2, as the case may be, on the date to which the representation,
        warranty or covenant refers; provided, however, where Schedule 1.1 “Seller’s and
        TOPIII’s Persons With Knowledge” and
  5
 Table
            of Contents
 Schedule
        1.2 “Purchaser’s Persons With Knowledge” respectively limit an employee’s,
        officer’s or director’s actual knowledge to specified representations,
        warranties and covenants, then “Knowledge” shall refer to the actual knowledge
        after due inquiry of such officer or director with respect to only the specified
        representations, warranties and covenants. As used in this Agreement or the
        Related Agreements, the phrase “to Seller’s Knowledge” (or words of similar
        import) shall also include the Knowledge of TOPIII and the phrase “to TOPIII’s
        Knowledge” (or words of similar import) shall also include the Knowledge of
        Seller.
  “ Liens ”
means
        any mortgages, deeds of trust, pledges, liens, mechanic’s liens, materialmen’s
        liens, judgment liens, liens for delinquent real property taxes or assessments,
        other tax or statutory liens, security interests, easements, rights-of-way,
        licenses, purchase options, rights of first refusal, rights of first
        negotiation, rights of first offer, ground leases, leases, subleases, occupancy
        or use agreements, concessions, oil and gas leases, mineral leases, rights
        or
        reservations, conditional and installment sale agreements, activity and use
        limitations, conservation limitations, covenants, conditions and restrictions,
        deed restrictions and encumbrances and charges of any kind.
  “ Load
        Testing ”
has
        the
        meaning set forth in Section 5.12.
  “ Material
        Adverse Effect ”
means
        any change (or changes taken together) in, or effect on, the Facility that
        is
        (are) (i) materially adverse to the operations or condition of the Facilty
        taken
        as a whole or (ii) results (result) in liabilities that are
        reasonably anticipated to require costs, fees, fines, penalties or other
        expenditures, other than those that Seller agrees to classify as Excluded
        Liabilities pursuant to Section 5.24, in excess of Twenty Five Million Dollars
        ($25,000,000) (provided that such condition, event or circumstance giving
        rise
        to such liabilities arose after the Initial Closing Date and has not been
        disclosed to Purchaser prior to the Effective Date), but
        excluding (1) any change (or changes taken together) or effect generally
        affecting the international, national, regional or local electric industry
        as a
        whole and not affecting the Facility materially differently from other like
        facilities, (2) any change (or changes taken together) or effect resulting
        from
        changes in the international, national, regional or local wholesale or retail
        markets for electric power, including changes in the cost of fuels or the
        pricing of electrical power, (3) any change (or changes taken together) or
        effect resulting from the international, national, regional or local markets
        for
        fuel used at the Facility, (4) any change (or changes taken together) in,
        or
        effect on, the North American, national, regional or local transmission system,
        (5) any change (or changes taken together) or effect which is cured (including
        by the payment of money) before the earlier of the Closing or the termination
        of
        this Agreement under Section 9.14, (6) any order of or action by any
        Governmental Authority applicable to providers of generation, transmission
        or
        distribution of electricity generally that imposes restrictions, regulations
        or
        other requirements thereon, (7) any change (or changes taken together) or
        effect
        resulting from action or inaction by a Governmental Authority with respect
        to a
        regional transmission operator, an independent system operator or retail
        access
        in Texas, (8) any adverse effect resulting from or arising out of the Disputes
        with Walnut Creek, including any adverse effect (including without limitation
        the loss of supply of fuel) from any litigation or settlement related thereto,
        (9) any change (or changes taken together) or effect resulting from or arising
        out of the execution of this Agreement, the consummation of the transactions
        contemplated hereby or the announcement of this Agreement or the transactions
        contemplated hereby or (10) changes, after the Effective Date, in laws, rules
        or
        regulations of general applicability or interpretation thereof by courts
        or
        Governmental Authorities. Any determination as to whether any condition or
        other
        matter has a Material Adverse Effect shall be made only after taking into
        account all effective insurance coverage and effective indemnifications with
        respect to such condition or matter.
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 “ Off-Site
        Disposal Facility ”
means
        a
        facility not located on the Site which receives or has received Hazardous
        Materials from the Facility for recycling, disposal, treatment, storage or
        processing.
  “ Operating
        Assets ”
means
        the “operating assets” (as such term is defined in Texas Comptroller Rule 3.316)
        associated with the Facility.
  “ Order ”
means
        any writ, judgment, decree, injunction or similar order of any Governmental
        Authority (in each such case whether preliminary or final).
  “ Owned
        Property ”
means
        the real property consisting of the Site and the Well Sites as more fully
        described on Schedule 1.3-A “Legal Description of the Site” and Schedule 1.3-B
“Legal Description of the Well Sites.”
  “ Party ”
means
        Seller or Purchaser, or their respective permitted successors or assigns,
        as the
        context requires. “Party” also includes TOPIII to the extent that TOPIII holds
        title to certain of the Assets or is a party to an Assigned Contract. “Parties”
means, collectively, Seller and Purchaser, or their respective permitted
        successors or assigns, and includes TOPIII, Seller’s Parent and/or Purchaser’s
        Parent where applicable under the definition of “Party.”
  “ Permit
        Applications ”
has
        the
        meaning set forth in Section 2.1(o).
  “ Permitted
        Liens ”
means
        (a) statutory liens for taxes not yet due or not yet delinquent;
        (b) mechanics’, workers’ or materialmen’s liens incurred in the ordinary
        course of Seller’s business, to the extent such business is related to the
        Facility, the Site, or the Assets, which individually or in the aggregate
        do not
        exceed $100,000; (c) the title exceptions set forth in the Title Commitment
        as
        Schedule B exceptions; (d) the matters described on Schedule 3.17 and (e)
        any
        additional encumbrances to title created after the Initial Closing Date to
        any
        Real Property Interest that would not reasonably be expected to have a Material
        Adverse Effect on the Owned Property or the Real Property
        Interests.
  “ Permits ”
means
        any approvals, authorizations, consents, licenses, permits, variances or
        certificates from any Governmental Authority necessary to own, operate or
        maintain the Assets, including, without limitation, all approvals,
        authorizations, consents, licenses, permits, registrations or certificates
        required under Environmental Laws, zoning and subdivision laws, ordinances
        and
        regulations, and building codes and regulations.
  “ Person ”
means
        an individual, partnership, joint venture, corporation, limited liability
        company, trust, association or unincorporated organization, or any Governmental
        Authority.
  “ Personal
        Property Leases ”
means
        all leases of personal property under which Seller or TOPIII is a lessee
        or
        lessor and which relate to the Assets or the use, ownership, operation or
        maintenance of the Facility.
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 “ Post-Closing
        Environmental Conditions ”
means
        the presence of Hazardous Materials at, on, over or under the Owned Property
        (including the air, soil or groundwater thereof), or any portion thereof
        after
        the Closing Date, but specifically excluding any migration through the air,
        soil
        or groundwater after the Closing Date of Hazardous Materials present at,
        on,
        over or under the Owned Property (including the air, soil or groundwater
        thereof) prior to the Closing Date.
  “ Power
        Agreements ”
means
        the [*] PPA and the J. Aron PPA.
  “ PPA
        Assignment ”
means
        that certain assignment of the [*] PPA and the J. Aron PPA, in substantially
        the
        form of Exhibit J attached hereto, executed by Seller and
        Purchaser.
  “ Pre-Initial
        Closing Environmental Conditions ”
means
        the presence of Hazardous Materials at, on, over or under the Owned Property
        (including the air, soil or groundwater thereof) or any portion thereof,
        prior
        to the Initial Closing Date.
  “ Prime
        Rate ”
means
        the rate of interest per annum announced from time to time by Union Bank
        of
        California at its Los Angeles, California office.
  “ Proposed
        Expansion ”
means a
        third
        solid fuel fired electric generating unit to be built on the Owned Property
        that
        would have a generating capacity of approximately 600 megawatts, which Sempra
        Generation currently plans to develop and construct.
  “ Prudent
        Utility Practices ”
means
        any of the practices, methods and acts engaged in or approved by a significant
        portion of the electric utility industry, including power generation companies,
        in the geographic region covered by ERCOT (or any successor entity) during
        the
        relevant time period, or any of the practices, methods or acts which, in
        the
        exercise of reasonable judgment in light of the facts known at the time the
        decision was made, could have been expected to accomplish the desired result
        at
        a reasonable cost consistent with good business practices, reliability, safety
        and expedition. Prudent Utility Practice is not intended to be limited to
        the
        optimum practice, method or act to the exclusion of all others, but rather
        to be
        acceptable practices, methods or acts generally accepted in the ERCOT
        region.
  “ PUC ”
means
        the Public Utility Commission of Texas, or its regulatory successor, as
        applicable.
  “ Purchase
        Price ”
has
        the
        meaning set forth in Section 2.6.
  “ Purchaser ”
has
        the
        meaning set forth in the introductory paragraph of this Agreement.
  “ Purchaser
        Indemnitee ”
has
        the
        meaning set forth in Section 8.1(b).
  “ Purchaser
        Plans ”
has
        the
        meaning set forth in Section 5.17(b).
  “ Purchaser-Caused
        Environmental Condition ”
means
        those Hazardous Materials at, on, over or under the Owned Property (including
        the air, soil or groundwater thereof) or any portion thereof from and after
        the
        Closing Date, including any migration of such Hazardous Materials from the
        Owned
        Property (including the air, soil or groundwater thereof) or any portion
        thereof, including any Off-Site Disposal Facility, to the extent that the
        presence or migration of such
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 Hazardous
        Materials was caused by, arose from or relates to the operations or activities
        of Purchaser and its Affiliates, and their respective successors, or assigns,
        or
        any of their respective agents or representatives, at the Owned Property
        (including the air, soil or groundwater thereof) or any portion thereof from
        and
        after the Closing Date.
  “ Purchaser’s
        GP ”
has
        the
        meaning set forth in Section 4.1(a).
  “ Purchaser’s
        Guaranteed Obligations ”
has
        the
        meaning set forth in Section 5.21(a).
  “ Purchaser’s
        Parent ”
has
        the
        meaning set forth in the introductory paragraph of this Agreement.
  “ Purchaser’s
        Required Consents ”
has
        the
        meaning set forth in Section 5.3.
  “ Qualified
        Scheduling Entity ”
means
        a
        market participant that is certified by the ISO to submit schedules and
        ancillary bids.
  “ Real
        Property Interests ”
has
        the
        meaning set forth in Section 3.17.
  “ Related
        Agreements ”
means
        the Confidentiality Agreement, the Special Warranty Deed, the Bill of Sale,
        the
        Assignment, the Fuel Agreement Assignment, the PPA Assignment and any other
        document executed by the Parties and designated as a “Related Agreement” in such
        document (to the extent such agreement is not in connection with an Excluded
        Asset pursuant to Section 2.2(a)).
  “ Release ”
means
        release, spill, leak, discharge, dispose of, pump, pour, emit, empty, inject,
        leach, dump or allow to escape into or through the environment.
  “ Remediation ”
means
        any of the following activities required by a Governmental Authority or
        otherwise undertaken by a Party in the exercise of its reasonable judgment,
        to
        the extent such activities relate to or arise from the presence of Hazardous
        Materials at, on, over or under the Owned Property (including the soil, air
        or
        groundwater) or any off-Site location (including any Off-Site Disposal
        Facility): (a) monitoring, investigation, testing, cleanup, containment,
        capping, remediation, removal, transporting off-Site for disposal, disposal,
        mitigation, response or restoration work, and any operation, maintenance,
        repair
        or replacement of any structures, equipment, containment material or the
        like
        installed or constructed on the Owned Property pursuant to any remediation
        work,
        including any removal and replacement of underground or aboveground structures
        or utilities; (b) obtaining any Permits from any Governmental Authority
        necessary to conduct any such work; (c) preparing and implementing any plans
        or
        studies for such work; and (d) any other activities reasonably necessary,
        appropriate or required under Environmental Laws to address the presence
        of
        Hazardous Materials at, on, over or under the Owned Property (including the
        soil, air or groundwater) or any portion thereof.
  “ Retained
        Assets ”
means
        those assets that are subject to the Retained Assets Agreement.
  “ Retained
        Assets Agreement ”
means
        the Retained Assets Agreement, dated June 14, 2002, between Seller and
        TNP.
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 “ Schedules ”
means
        the schedules to this Agreement.
  “ SEC ”
means
        the Securities and Exchange Commission.
  “ Section ”
means
        a
        numbered section of this Agreement included within the Article that begins
        with
        the same number as that section.
  “ Seller-Caused
        Environmental Condition ”
means
        those Hazardous Materials at, on, over or under the Owned Property (including
        the soil, air or groundwater) or any portion thereof prior to the Closing
        Date,
        including any migration of such Hazardous Materials from the Owned Property
        (including the soil, air or groundwater) or any portion thereof, including
        any
        Off-Site Disposal Facility, to the extent that the presence or migration
        of such
        Hazardous Materials was caused by, arose from or relates to the operations
        or
        activities of Seller, TOPIII, their respective Affiliates, successors or
        assigns, or any of their respective agents or representatives, at the Owned
        Property or any portion thereof on or after the Initial Closing
        Date.
  “ Seller
        Indemnitee ”
has
        the
        meaning set forth in Section 8.1(a).
  “ Seller ”
has
        the
        meaning set forth in the introductory paragraph of this Agreement.
  “ Seller’s
        Dispute Notice ”
has
        the
        meaning set forth in Section 2.7(a).
  “ Seller’s
        Employees ”
has
        the
        meaning set forth in Section 3.19(a).
  “ Seller’s
        GP ”
has
        the
        meaning set forth in Section 3.1(a).
  “ Seller’s
        Guaranteed Obligations ”
has
        the
        meaning set forth in Section 5.22(a).
  “ Seller’s
        Parent ”
has
        the
        meaning set forth in the introductory paragraph of this Agreement.
  “ Seller’s
        Required Consents ”
has
        the
        meaning set forth in Section 5.3.
  “ Seller’s
        Title Policies ”
has
        the
        meaning set forth in Section 6.10.
  “ Sempra ”
means
        Sempra Energy, a California corporation, or Sempra Global, a California
        corporation, collectively and each individually, as the case may
        be.
  “ Site ”
means
        those certain parcel(s) of real property described on Schedule 1.3-A “Legal
        Description of the Site.” Any reference to the Site shall include, by
        definition, the surface and subsurface elements, including the soils and
        groundwater present at the Site, and any reference to items “at the Site” shall
        include all items “at, on, in, upon, over, across, under and within” the
        Site.
  “ Special
        Warranty Deed ”
means
        that certain deed in the form of Exhibit F attached hereto.
  “ Tax
        Claim ”
has
        the
        meaning set forth in Section 5.6(a).
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 “ Taxes ”
means
        any federal, state, local or foreign income, gross receipts, license, payroll,
        employment, excise, severance, stamp, occupation, premium, windfall profits,
        environmental (including taxes under Section 59A of the Internal Revenue
        Code of
        1986, as amended), customs duties, capital stock, franchise, profits,
        withholding, social security (or similar), unemployment, disability, real
        property (including assessments, fees or other charges based on the use or
        ownership of real property), personal property, intangible property, sales,
        use,
        utility users, business license, transfer, registration, value added,
        alternative or add-on minimum, estimated tax, or other tax of any kind
        whatsoever, including any interest, penalty or addition thereto, whether
        disputed or not, including any item for which liability arises as a transferee
        or successor-in-interest.
  “ Tax
        Returns ”
means
        any return, report, information return, declaration, claim for refund or
        other
        document (including any schedule or related or supporting information) required
        to be supplied to any taxing authority with respect to Taxes including
        amendments thereto.
  “ Third
        Party ”
means
        any Person who is not a party to this Agreement, other than Affiliates of
        Seller, TOPIII or Purchaser.
  “ Third
        Party Claim ”
means
        a
        claim, action, suit, demand or proceeding by a Third Party.
  “ Title
        Commitment ”
means
        that certain Commitment for Title Insurance issued by the Title Insurer on
        January 11, 2006 (with an effective date of January 9, 2006) covering the
        Real
        Property Interests.
  “ Title
        Insurer ”
has
        the
        meaning set forth in Section 6.10.
  “ Title
        Policies ”
has
        the
        meaning set forth in Section 6.10.
  “ TNMP ”
means
        Texas-New Mexico Power Company and its successor(s) in interest.
  “ TOPIII ”
has
        the
        meaning set forth in the introductory paragraph of this Agreement.
  “ TOPIII’s
        GP ”
has
        the
        meaning set forth in Section 3.1(a).
  “ TOPIII’s
        Required Consents ”
has
        the
        meaning set forth in Section 5.3.
  “ Transferred
        Employee ”
has
        the
        meaning set forth in Section 5.17(a).
  “ Transition
        Services Agreement ”
means
        that certain agreement, dated not later than the Closing Date, between Seller
        and Purchaser for the provision by Seller of the services described in Exhibit
        K.
  “ 2002
        Purchase and Sale Agreement ”
means
        that certain Purchase and Sale Agreement by and among Texas-New Mexico Power
        Company, Texas Generating Company, L.P. and Seller, dated as of June 14,
        2002.
  “ [*]
        PPA ”
means
        the Amended and Restated Master Power Purchase and Sale Agreement, dated
        June
        14, 2002, between Seller and [*], for the purchase and sale of electrical
        energy, and the Second Transaction Confirmation executed as of June 14,
        2002.
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 “ Walnut
        Creek ”
has
        the
        meaning set forth in Section 5.3(e)(2).
  “ Well
        Sites ”
means
        those certain parcels of real property described on Schedule 1.3-B “Legal
        Description of the Well Sites.” Any reference to the Well Sites shall include,
        by definition, the surface and subsurface elements, including the soils and
        groundwater present at the Well Sites, and any reference to items “at the Well
        Sites” shall include all items “at, on, in, upon, over, across, under and
        within” the Well Sites.
  1.2  Interpretation .
        In this
        Agreement, unless a clear contrary intention appears:
  (a)  reference
        to any Person includes such Person’s successors and assigns but, if applicable,
        only if such successors and assigns are permitted by this Agreement, and
        reference to a Person in a particular capacity excludes such Person in any
        other
        capacity;
  (b)  reference
        to any gender includes each other gender;
  (c)  reference
        to any agreement (including this Agreement), document or instrument means
        such
        agreement, document or instrument as amended or modified and in effect from
        time
        to time in accordance with the terms thereof and, if applicable, the terms
        hereof;
  (d)  reference
        to any Article, Section, Schedule or Exhibit means such Article, Section,
        Schedule or Exhibit to this Agreement, and references in any Article, Section,
        Schedule, Exhibit or definition to any clause means such clause of such Article,
        Section, Schedule, Exhibit or definition;
  (e)  “hereunder,”
        “hereof,” “hereto” and words of similar import are references to this Agreement
        as a whole and not to any particular Section or other provision hereof or
        thereof;
  (f)  “including”
        (and with correlative meaning “include”) means including without limiting the
        generality of any description preceding such term; and
  (g)  relative
        to the determination of any period of time, “from” means “from and including,”
“to” means “to but excluding,” and “through” means “through and
        including.”
  ARTICLE
        II
  PURCHASE
        AND SALE OF ASSETS
  2.1  Transfer
        of Assets .
        Subject
        to the terms and conditions of this Agreement, the Related Agreements and
        any
        reservations in the Special Warranty Deed, Seller and TOPIII will sell, convey,
        assign, transfer and deliver to Purchaser (or any directly or indirectly
        wholly-owned subsidiary of Purchaser’s Parent designated by Purchaser; provided
        that such designee becomes party to this Agreement and jointly liable with
        Purchaser with respect to Purchaser’s obligations hereunder), and Purchaser will
        purchase and acquire from Seller and TOPIII on the Closing Date, all of Seller’s
        and TOPIII’s respective rights, title and interests in and to the following
        assets, free and clear of any and all Liens other than Permitted Liens, which
        assets shall include all of the Operating Assets (such assets, collectively,
        the
“Assets”):
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 (a)  Facility .
        The
        Facility.
  (b)  Improvements,
        Buildings, Structures and Equipment .
        Excluding the Excluded Assets, all improvements, buildings, structures, fixtures
        (including any containers, structures or equipment used for the transportation,
        storage, disposal, treatment and handling of hazardous waste, Hazardous
        Materials, condensate, used oil, or any of them) and any underground storage
        tanks and underground piping which are part of the Facility or which are
        otherwise located on the Owned Property or any portion thereof (collectively,
        the “Improvements”), including, without limitation, those items described in
        Schedule 2.1(b) “Improvements, Buildings, Structures and
        Equipment.”
  (c)  Real
        Property Rights .
        The
        Owned Property, as more particularly described on Schedule 1.3-A “Legal
        Description of the Site” and Schedule 1.3-B “Legal Description of the Well
        Sites,” the Real Property Interests, and all material easements, licenses,
        rights-of-way, profits-a-prendre, use or occupancy agreements and covenants
        running with the land held by or in favor of Seller or TOPIII or to which
        Seller
        or TOPIII is a party which relate to the Facility or the use, ownership,
        operation or maintenance thereof, as disclosed on Schedule 2.1(c) “Other Real
        Property Rights,” with the exception of (i) the reservations in the Special
        Warranty Deed and (ii) the Excluded Assets.
  (d)  Permits .
        All
        Permits described in Schedule 2.1(d) “Permits,” to the extent transferable.
        Neither Seller nor TOPIII makes any representation that any Permit is
        transferable. Seller and TOPIII will use Commercially Reasonable Efforts
        to
        assist Purchaser in any effort to transfer any Permit.
  (e)  Emission
        Allowances and Emission Reduction Credits .
        All
        Emission Allowances and Emission Reduction Credits, whether they have accrued
        prior to or after the Closing Date, to the extent associated with the Facility,
        as described on Schedule 2.1(e) “Emission Allowances and Emission Reduction
        Credits.”
  (f)  Books
        and Records .
        All
        books, records (including without limitation, accounting, purchasing,
        employment, payroll, benefits and tax records), documents, drawings, sepias,
        bluelines, engineering documents, design records, plant and equipment operating
        manuals and procedures, reports, operating data, safety and maintenance manuals,
        specifications, procedures and similar items of Seller or TOPIII relating
        to the
        Assets, in electronic form or otherwise and wherever located (collectively,
        “Books and Records”).
  (g)  Inventories .
        All
        Inventories, in each case to the extent located at the Owned Property, as
        described on Schedule 2.1(g) “Inventories.”
  (h)  Other
        Personal Property .
        All
        other tangible and intangible personal property relating to the Facility
        and
        owned or leased by Seller or TOPIII, in each case to the extent located at
        the
        Owned Property, as described on Schedule 2.1(h) “Other Personal
        Property.”
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 (i)  Intellectual
        Property .
        The
        Intellectual Property described in Schedule 2.1(i) “Intellectual
        Property.”
  (j)  Use
        of
        Names .
        The
        right to use the names “Twin Oaks Power, LP”, “Twin Oaks Power Station” and
“Twin Oaks Power III, LP”, to the extent Seller and/or TOPIII has the right to
        use the names.
  (k)  Equipment .
        All
        machinery (mobile or otherwise), equipment (including without limitation,
        communication, computer and electronic equipment), furniture and furnishings,
        together with all other personal property of Seller or TOPIII used principally
        in the operation of the Facility, as listed on Schedule 2.1(b) “Improvements,
        Buildings, Structures and Equipment.”
  (l)  Assigned
        Contracts .
        All
        contracts, agreements, use or occupancy agreements, licenses, subleases and
        leases relating to the use, ownership, operation or maintenance of the Facility
        and the Assets, including, without limitation, any Personal Property Leases,
        in
        each case to the extent transferable to Purchaser, other than those contracts,
        agreements, use or occupancy agreements, licenses, subleases or leases which
        expire by their terms on or before the Closing Date (the “Assigned Contracts”),
        each as listed on Schedule 3.9(a) “Assigned Contracts.”
  (m)  Warranties .
        All
        unexpired warranties and guarantees as of the Closing Date that relate
        specifically to the Assets, to the extent transferable (it being understood
        that
        Seller makes no representation that any such unexpired warranties and guarantees
        exist, remain enforceable or are transferable), each as listed on Schedule
        2.1(m) “Warranties.”
  (n)  Spare
        Parts .
        All
        spare parts for the operation and/or maintenance of the Facility, as described
        on Schedule 2.1(g) “Inventories.”
  (o)  Permit
        Applications .
        All
        applications for Permits existing or filed on or before the Closing Date
        related
        to the Proposed Expansion or the Facility (“Permit Applications”), to the extent
        transferable.
  2.2  Retained
        Assets and Excluded Assets .
  (a)  Nothing
        in this Agreement will constitute or be construed as conferring on Purchaser,
        and Purchaser is not acquiring or assuming, any right, title or interest
        in or
        to, or any liability or obligation relating to, any of the following (the
        “Excluded Assets”): (i) the assets listed or described on Schedule 2.2, which
        are associated with the Assets but are specifically excluded from the sale,
        (ii)
        the Retained Assets and (iii) any of the following: (x) any properties, assets,
        business, operation, subsidiary or division of Seller, TOPIII or any of their
        Affiliates, whether tangible or intangible, real, personal or mixed, not
        expressly set forth in Section 2.1 “Transfer of Assets,” including any cash or
        working capital of Seller, TOPIII or their Affiliates, even if the working
        capital or cash relates to the Facility, the Assets, or the Site; (y) any
        communications between Seller or TOPIII and any of their Affiliates and their
        respective counsels, including attorney-client privileged or work product
        material, in the books, records, documents or other information located at
        the
        Owned Property; or (z) the following names or acronyms: “Sempra Energy”,
“Sempra”, “SRE”, “Sempra Energy Resources”, “SER”, “Sempra Generation” and any
        and all logos associated with the foregoing names or acronyms.
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 (b)  Purchaser
        acknowledges and agrees that TNMP shall retain the Retained Assets and may
        use,
        operate, maintain, replace and improve such Retained Assets pursuant to the
        Retained Assets Agreement and the reservations in the Special Warranty
        Deed.
  2.3  Assumed
        Liabilities .
        Subject
        to the terms of this Agreement, as of the Closing Date, Purchaser will be
        responsible for all obligations and liabilities related to, arising from
        or
        associated with use, ownership, operation or maintenance of the Assets which
        arise prior to the Initial Closing Date or on and after the Closing Date,
        including the obligations and liabilities set forth below in subparagraphs
        (a)-(h) inclusive (collectively, “Assumed Liabilities”):
  (a)  Liabilities
        relating to or resulting from any Pre-Initial Closing Environmental Conditions,
        Post-Closing Environmental Conditions and Purchaser-Caused Environmental
        Conditions, including responsibility for any Third Party Claims related to
        the
        same.
  (b)  Obligations
        to comply with Environmental Laws and to comply with the Permits listed in
        Schedule 2.1(d) “Permits,” or otherwise obtained or required in connection with
        the Assets, prior to the Initial Closing Date or on and after the Closing
        Date,
        or in connection with Purchaser’s acquisition of the Assets, including: (i)
        obligations to implement actions needed to comply with or operate in compliance
        with Environmental Laws and any Permits, Orders, variances and approvals
        prior
        to the Initial Closing Date or on and after the Closing Date; and (ii) liability
        for and in connection with any monitoring, testing, sampling or other
        environmental investigation required to comply with, or to establish or
        determine compliance with, applicable Environmental Laws and Permits, Orders,
        variances and approvals, or as an operational requirement under any applicable
        Environmental Laws and Permits, Order, variance or approval prior to the
        Initial
        Closing Date or on and after the Closing.
  (c)  Obligations
        arising on and after the Closing Date under any pending applications for
        new
        Permits relating to the Facility, and any pending applications for amendments,
        modifications, extensions or renewals of any existing Permits, in each case
        to
        the extent that Purchaser desires to proceed with such
        applications.
  (d)  Obligations
        under the Assigned Contracts arising after the Closing Date.
  (e)  Any
        liability, obligation or responsibility under or related to Environmental
        Laws
        or the common law caused by the off-Site disposal, storage, transportation,
        discharge, Release, or recycling of Hazardous Materials, or the arrangement
        for
        such activities by Purchaser in connection with Purchaser’s use, ownership,
        operation or maintenance of the Assets prior to the Initial Closing Date
        or from
        and after the Closing Date.
  (f)  Any
        liability, obligation or responsibility under or related to Environmental
        Laws
        or the common law, whether such liability, obligation or responsibility is
        known
        or unknown, contingent or accrued, as a result of any Remediation done by
        or on
        behalf of Purchaser or any of its Affiliates in respect of Pre-Initial Closing
        Environmental Conditions, Post-Closing Environmental Conditions and
        Purchaser-Caused Environmental Conditions ( whether
        or not such Remediation commenced before the Closing Date or commences on
        or
        after the Closing Date) of
        Hazardous Materials that are disposed, stored, transported, discharged,
        Released, recycled, or the arrangement of such activities by or on behalf
        of
        Purchaser to the extent related to Purchaser’s or any of its Affiliates’
ownership, operation or maintenance of the Assets prior to the Initial Closing
        Date or from and after the Closing Date, at any off-Site location.
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 (g)  Third
        Party liability for or Third Party Claims arising as a result of or in
        connection with any toxic tort, loss of life or injury to persons due to
        the
        presence or Release of Hazardous Materials caused by Purchaser or any of
        its
        Affiliates at, on, over, under, adjacent to or migrating from the Owned Property
        prior to the Initial Closing Date or on or after the Closing Date.
  (h)  Any
        liabilities or obligations of TOPIII or Seller in respect of the Retained
        Assets, whether or not such liabilities or obligations arose prior to or
        after
        the Closing Date.
  2.4  Excluded
        Liabilities .
        Purchaser shall not assume or be obligated to pay, perform or otherwise
        discharge the following liabilities or obligations (the “Excluded
        Liabilities”):
  (a)  Any
        liabilities or obligations of TOPIII or Seller in respect of the Excluded
        Assets
        or other assets of TOPIII or Seller which are not part of the
        Assets.
  (b)  Except
        as
        provided in Section 5.6 “Taxes, Prorations and Closing Costs,” any liabilities
        or obligations in respect of Taxes attributable to the use, ownership, operation
        or maintenance of the Assets for taxable periods, or portions thereof, ending
        after the Initial Closing Date and on or before the Closing Date.
  (c)  Any
        liabilities or obligations of Seller or TOPIII accruing under any of the
        Assigned Contracts prior to the Closing Date.
  (d)  Any
        and
        all asserted or unasserted liabilities or obligations to Third Parties
        (including Seller’s Employees) or Affiliates of Seller or TOPIII for personal
        injury or tort or under contract, or similar causes of action arising out
        of the
        use, ownership, operation or maintenance of the Assets by Seller or TOPIII
        or
        their respective Affiliates on or after the Initial Closing Date and prior
        to
        the Closing Date.
  (e)  Any
        fines, penalties or costs imposed by a Governmental Authority resulting from
        (i)
        an investigation, proceeding, request for information or inspection before
        or by
        a Governmental Authority regarding acts of Seller, TOPIII or their respective
        Affiliates which occurred on or after the Initial Closing Date and prior
        to the
        Closing Date, or (ii) illegal acts, willful misconduct or gross negligence
        of
        Seller, TOPIII or their respective Affiliates which occurred on or after
        the
        Initial Closing Date.
  (f)  Any
        payment obligations of Seller, TOPIII or their respective Affiliates for
        goods
        purchased or delivered, or services rendered prior to the Closing Date,
        including but not limited to, rental payments payable by Seller, TOPIII or
        their
        respective Affiliates pursuant to the leases of real property or personal
        property.
  (g)  Any
        liability, obligation or responsibility under or related to Environmental
        Laws
        or the common law, whether such liability or obligation or responsibility
        is
        known or unknown, contingent or accrued, arising as a result of or in connection
        with loss of life, injury to persons or property or damage to natural resources
        (whether or not such loss, injury or damage arose or was
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 made
        manifest before the Closing Date or arises or becomes manifest on or after
        the
        Closing Date) caused by the off-Site disposal, storage, transportation,
        discharge, Release, or recycling of Hazardous Materials, or the arrangement
        for
        such activities by Seller, TOPIII or their respective Affiliates, of Hazardous
        Materials, on or after the Initial Closing Date and prior to the Closing
        Date,
        in connection with the use, ownership, operation or maintenance of the Assets
        by
        Seller, TOPIII or their respective Affiliates.
  (h)  Any
        liability, obligation or responsibility under or related to Environmental
        Laws
        or the common law, whether such liability, obligation or responsibility is
        known
        or unknown, contingent or accrued, as a result of the Remediation done by
        or on
        behalf of Seller, TOPIII or their respective Affiliates in respect of
        Seller-Caused Environmental Conditions (whether or not such Remediation
        commenced before the Closing Date or commences on or after the Closing Date)
        of
        Hazardous Materials that are disposed, stored, transported, discharged,
        Released, recycled, or the arrangement of such activities by Seller, TOPIII
        or
        their respective Affiliates on or after the Initial Closing Date and prior
        to
        the Closing Date, in connection with the use, ownership, operation or
        maintenance of the Assets by Seller, TOPIII or their respective Affiliates,
        at
        any off-Site location.
  (i)  Third
        Party liability for or Third Party Claims arising as a result of or in
        connection with any toxic tort, loss of life or injury to persons (whether
        or
        not such loss or injury arose or was made manifest on or after the Closing
        Date)
        due to the presence or Release of Hazardous Materials caused by Seller, TOPIII
        or their respective Affiliates at, on, over, under, adjacent to or migrating
        from the Owned Property on or after the Initial Closing Date and prior to
        the
        Closing Date.
  (j)  Any
        liability relating to or resulting from any Seller-Caused Environmental
        Conditions, including responsibility for any Third Party Claims related to
        the
        same.
  (k)  Any
        liabilities or obligations relating to any Benefit Plan which have accrued
        prior
        to the Closing Date, including but not limited to any liability (i) relating
        to
        benefits payable under any such Benefit Plan; (ii) relating to the Pension
        Benefit Guaranty Corporation under Title IV of ERISA with respect to any
        such
        Benefit Plan; (iii) relating to any such Benefit Plan that is a multiemployer
        plan; (iv) with respect to non-compliance with the notice and benefit
        continuation requirements of COBRA in connection with any such Benefit Plan;
        (v)
        with respect to any non-compliance of any such Benefit Plan with ERISA or
        any
        other applicable laws; or (vi) with respect to any suit, proceeding or claim
        which is brought against (1) Purchaser with respect to any such Benefit Plan,
        (2) any such Benefit Plan or (3) any fiduciary or former fiduciary of any
        such
        Benefit Plan.
  (l)  Any
        liabilities or obligations relating to the employment or termination of
        employment of Seller’s Employees by Seller, including discrimination, wrongful
        discharge, unfair labor practices, or constructive termination by Seller
        of any
        individual, attributable to any actions or inactions by Seller prior to the
        Closing Date other than such actions or inactions taken at and in accordance
        with the written direction of Purchaser.
  (m)  Any
        obligations to Seller’s Employees or any independent contractors of Seller for
        wages, commissions, overtime, employment taxes, severance pay, transition
        payments in respect of compensation or similar benefits accruing or arising
        prior to the Closing Date under any term or provision of any contract, plan,
        instrument or agreement relating to any of the Assets.
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 (n)  Any
        liability of Seller or TOPIII arising out of a breach by Seller or TOPIII
        of any
        of their respective obligations under this Agreement or the Related
        Agreements.
  (o)  [Reserved]
  (p)  Any
        obligation or liability related to, arising from or associated with the use,
        ownership, operation or maintenance of the Assets on or after the Initial
        Closing Date and prior to the Closing Date.
  (q)  Any
        liability or obligation not otherwise expressly assumed by Purchaser under
        Section 2.3 “Assumed Liabilities”.
  (r)  Any
        liability or obligation classified as an Excluded Liability by Seller pursuant
        to Section 5.24.
  2.5  Closing .
  (a)  Closing
        Date .
        Subject
        to the provisions of Section 9.14 “Termination” and the following proviso, the
        closing of the sale of the Assets to, and the assumption by, Purchaser of
        the
        Assumed Liabilities (the “Closing”) shall take place at the offices of Cleary
        Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York, 10006
        at 10:00 a.m. EST on the later of (i) April 17, 2006 or (ii) the first such
        date
        as practicable after satisfaction or waiver of the conditions to the
        consummation of the transactions hereunder, or on such other date and at
        such
        other place as the Parties may mutually agree, provided that if such date
        falls
        on a non-Business Day, the Closing shall take place on the next succeeding
        Business Day. The date of Closing is hereinafter called the “Closing Date.” Each
        Party will use Commercially Reasonable Efforts to cause the Closing to occur
        at
        10:00 a.m. EST on the Closing Date, including Purchaser’s wiring of funds and
        the Parties’ authorizing of recording of the Special Warranty Deed and the
        Assignment by such time on the Closing Date. Purchaser shall take physical
        possession of the Assets on the Closing Date.
  2.6  Purchase
        Price and Allocation .
  (a)  The
        consideration for the purchase of the Assets shall be Four Hundred Eighty
        Million Dollars ($480,000,000) (the “Purchase Price”), payable by Purchaser to
        Seller and TOPIII on the Closing Date in U.S. dollars by wire transfer of
        immediately available funds. Seller will designate no later than five (5)
        Business Days prior to the anticipated Closing Date the account or accounts
        of
        Seller to which the Purchase Price will be wire transferred. The Parties
        will
        attempt in good faith to agree upon the allocation of the Purchase Price
        for
        purposes of Code Section 1060 and Form 8594; provided, however, such agreement
        is not a condition precedent to the Closing; provided, further, that nothing
        contained herein shall be interpreted as an expression of an intention by
        a
        Party or an agreement between the Parties with respect to allocating the
        Purchase Price for any other purpose.
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 (b)  On
        the
        Closing Date, the Purchase Price shall be adjusted to account for the items
        prorated as of the Closing Date pursuant to Section 5.6 “Taxes, Prorations and
        Closing Costs”.
  2.7  Post-Closing
        Audit of Assets and Post-Closing Adjustment to Purchase Price .
  (a)  Within
        ten (10) Business Days after the Closing Date, Purchaser shall cause an audit
        or
        agreed upon procedure (the “Audit”) to be conducted by Deloitte & Touche,
        LLP (the “Auditor”) to determine whether any Assets disclosed on the disclosure
        schedules to this Agreement were not actually transferred and delivered to
        Purchaser by Seller or TOPIII, as the case may be, on the Closing Date. During
        the course of the Audit, the Auditor shall prepare a list of the specific
        Assets
        which Seller or TOPIII did not actually transfer and deliver to Purchaser
        on the
        Closing Date (the “Closing Date Non-Transferred Assets List”). At least two (2)
        Business Days prior to the Audit, Purchaser shall notify Seller and TOPIII
        of
        the date and time at which the Audit will commence and Seller and TOPIII
        shall
        each have the right, but not the obligation, to have their respective
        representatives present for the duration of the Audit; provided, however,
        if
        Purchaser fails to provide such notice to Seller and TOPIII, then Seller
        and
        TOPIII shall be relieved of any obligations under Section 2.7(b). If Seller
        and
        TOPIII dispute the Closing Date Non-Transferred Assets List, Seller and TOPIII
        shall notify Purchaser in writing within five (5) Business Days after receipt
        of
        the Closing Date Non-Transferred Assets List (“Seller’s Dispute Notice”).
        Seller’s Dispute Notice shall specify each item to which Seller and TOPIII take
        exception, specifying in reasonable detail the nature and extent of any such
        exception; provided, however, if Seller and TOPIII do not deliver Seller’s
        Dispute Notice within the five (5) Business Day period, the Closing Date
        Non-Transferred Assets List shall be deemed accepted by Seller and TOPIII
        and
        shall be conclusive and binding on Seller, TOPIII and Purchaser for the purposes
        of the adjustment described in Section 2.7(b).
  (b)  Subject
        to Section 2.7(d), if the fair market value of the items listed on the Closing
        Date Non-Transferred Assets List prepared by the Auditor under Section 2.7(a)
        exceeds $25,000 individually or $50,000 in the aggregate, Seller or TOPIII,
        as
        the case may be, shall, at Purchaser’s sole option and election, either (i) pay
        Purchaser, as an adjustment to the Purchase Price paid by Purchaser, an amount
        equal to the fair market value of the Assets not so transferred and delivered
        to
        Purchaser on the Closing Date, or (ii) replace the missing Asset or Assets
        with
        replacements of the same value, quality and warranty satisfactory to Purchaser
        in its reasonable discretion. Any payments required to be made by Seller
        or
        TOPIII pursuant to this Section shall be made by wire transfer of immediately
        available funds to an account or accounts designated by Purchaser and shall
        be
        made by Seller or TOPIII, as the case may be, within ten (10) Business Days
        of
        the date on which the Closing Date Non-Transferred Assets List is delivered
        to
        Seller or TOPIII, and becomes conclusive and binding on Seller and Purchaser
        or
        TOPIII and Purchaser in accordance with Section 2.7(a). Any replacements
        required to be delivered by Seller or TOPIII pursuant to this Section shall
        be
        delivered to Purchaser within a reasonable time. Notwithstanding anything
        to the
        contrary, Purchaser reserves all rights it may have against Seller or TOPIII
        at
        law or in equity arising from Seller’s or TOPIII’s failure to transfer and
        deliver to Purchaser on the Closing Date all Assets disclosed on the disclosure
        schedules as of the Effective Date.
  (c)  Any
        dispute between Seller or TOPIII and Purchaser regarding the Closing Date
        Non-Transferred Assets List shall be resolved in accordance with Section
        2.8.
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 (d)  If
        any of
        the items listed on the Closing Date Non-Transferred Assets List are Operating
        Assets, Seller and TOPIII shall use Commercially Reasonable Efforts to deliver
        and transfer to Purchaser such Operating Assets within ten (10) Business
        Days of
        the date on which the Closing Date Non-Transferred Assets List is delivered
        to
        Seller and becomes conclusive and binding on Seller and Purchaser or TOPIII
        and
        Purchaser in accordance with Section 2.7(a); provided that if, despite the
        use
        of Commercially Reasonable Efforts, Seller or TOPIII, as the case may be,
        is
        unable to transfer and deliver to Purchaser all of such Operating Assets,
        and if
        the fair market value of the items listed on the Closing Date Non-Transferred
        Assets List (a) exceeds $25,000 individually or $50,000 in the aggregate,
        Seller
        or TOPIII, as the case may be, shall, at Purchaser’s sole option and election,
        either (i) pay Purchaser, as an adjustment to the Purchase Price paid by
        Purchaser, an amount equal to the fair market value of such Operating Assets
        not
        so transferred and delivered to Purchaser, or (ii) replace the missing Operating
        Assets with replacements of the same value, quality and warranty satisfactory
        to
        Purchaser in its reasonable discretion, each in accordance with Section 2.7(b).
        In addition, in the event that Seller, TOPIII or Purchaser discovers at any
        time
        after the Closing Date that any Operating Assets were not actually transferred
        and delivered to Purchaser on the Closing Date and such missing Operating
        Assets
        were not included on the Closing Date Non-Transferred Assets List, such Party
        shall notify the other Parties, which notice shall include a list of such
        missing Operating Assets, and Seller or TOPIII, as the case may be, shall
        use
        Commercially Reasonable Efforts to transfer and deliver such missing Operating
        Assets to Purchaser as soon as reasonably practicable.  Notwithstanding
        anything to the contrary in this Agreement, with respect to any Operating
        Assets
        that were not identified in the Schedules attached to this Agreement and
        were
        not transferred and delivered to Purchaser on the Closing Date, Seller’s and
        TOPIII’s obligation to use Commercially Reasonable Efforts to transfer and
        deliver such undisclosed and missing Operating Assets to Purchaser pursuant
        to
        this Section 2.7(d) shall be Purchaser’s sole and exclusive remedy for the
        failure of Seller and TOPIII to transfer and deliver such undisclosed and
        missing Operating Assets on the Closing Date, and Seller and TOPIII shall
        not
        have any additional liability or obligation hereunder as a result of such
        failure, including, without limitation, any liability or obligation to pay
        more
        than Seller’s 50% share of all transfer and documentary transfer Taxes arising
        in connection with the transfer of the Assets, including any sales or use
        tax,
        pursuant to Section 5.6(a)(1).
  (e)  Notwithstanding
        anything to the contrary herein, the Parties hereto agree that neither Seller
        nor Purchaser shall seek a ruling or determination from the Texas Comptroller
        of
        Public Accounts or other applicable Governmental Authority regarding the
        sales
        and/or use tax consequences arising from the transactions contemplated by
        this
        Agreement without receiving prior written consent of the other Party, such
        consent to be provided at the sole discretion of each Party. The Parties
        hereto
        agree to cooperate with each other in connection with preparing and pursuing
        any
        such ruling or determination, if any, that they may agree is
        desirable.
  2.8  Resolution
        of Dispute Regarding Closing Date Non-Transferred Assets List .
        Any
        dispute which may arise between Seller or TOPIII and Purchaser regarding
        the
        Closing Date Non-Transferred Assets List shall be resolved in the following
        manner:
  (a)  During
        the five (5) Business Day period following the delivery of Seller’s Dispute
        Notice to Purchaser, Seller, TOPIII and Purchaser shall attempt to resolve
        such
        dispute and to determine the accuracy of the Closing Date Non-Transferred
        Assets
        List; and
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 (b)  If
        at the
        end of the five (5) Business Day period specified in subsection (a) above,
        Seller, TOPIII and Purchaser fail to reach a written agreement with respect
        to
        such dispute, the Parties may exercise any rights they may have at law or
        in
        equity.
  2.9  [ Reserved ].
  2.10  [ Reserved ].
  2.11  Earn-out .
        In the
        event that (i) the Texas Commission on Environmental Quality issues a final
        air
        quality permit to construct that authorizes the construction of the Proposed
        Expansion on terms
        and
        conditions that are materially similar to those specified in the Application
        for Air Quality Permit No. 76381 and PSD-TX-1054 (TOPIII) submitted to the
        Texas
        Commission on Environmental Quality on July 13, 2005, Seller and TOPIII shall
        be
        entitled to receive from Purchaser an aggregate amount equal to Two Million
        Five
        Hundred Thousand Dollars ($2,500,000) in cash within ten (10) Business Days
        of
        the later to occur of the Closing Date and the date of such permit issuance,
        and
        (ii) within two (2) years after the date of such permit issuance, (a) Purchaser
        (or its designee) proceeds with actual physical on-site construction of the
        Proposed Expansion beyond site clearing activities or (b) Purchaser (or its
        designee) sells, auctions or otherwise transfers to a third party (which
        is not
        its Affiliate) the opportunity to construct the Proposed Expansion, Seller
        and
        TOPIII shall be entitled to receive from Purchaser an aggregate amount equal
        to
        Two Million Five Hundred Thousand Dollars ($2,500,000) in cash within ten
        (10)
        Business Days of the earlier to occur of (ii)(a) and (b), above; provided,
        however, that for purposes of this Section 2.11, an air quality permit shall
        be
        deemed “final” when it is final and appealable, being no longer subject to
        further challenge through any proceeding or other process initiated before
        the
        Texas Commission on Environmental Quality.
  ARTICLE
        III
 
 REPRESENTATIONS
        AND WARRANTIES OF SELLER, TOPIII AND SELLER’S PARENT
  Seller
        and TOPIII jointly and severally represent and warrant to Purchaser as follows
        as of the Effective Date and as of the Closing Date:
  3.1  Transaction
        Representations .
  (a)  Organization
        and Existence .
        Seller
        is a limited partnership duly organized, validly existing and in good standing
        under the laws of the State of Texas. TOPIII is a limited partnership duly
        organized, validly existing and in good standing under the laws of the State
        of
        Texas. Seller’s general partner, SETOP I, LLC (“Seller’s GP”) is a limited
        liability company duly organized, validly existing and in good standing under
        the laws of the State of Delaware. TOPIII’s general partner, SETOP III, LLC
        (“TOPIII’s GP”) is a limited liability company duly organized, validly existing
        and in good standing under the laws of the State of Delaware. Seller’s Parent is
        a corporation duly organized, validly existing and in good standing under
        the
        laws of the State of California. Each of Seller, TOPIII and Seller’s Parent has
        all requisite power and authority to own, lease, and operate its material
        properties and assets and to carry on its respective business as it is now
        being
        conducted. Each of Seller, TOPIII and Seller’s Parent is
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 duly
        qualified to do business as a limited partnership or corporation, as
        appropriate, in each other jurisdiction in which its respective business
        as now
        being conducted shall require it to be so qualified, except where the failure
        to
        be so qualified would not reasonably be expected to have a Material Adverse
        Effect. Seller, TOPIII and Seller’s Parent have heretofore delivered to
        Purchaser true, complete and correct copies of their respective governing
        documents, including, as applicable, articles of incorporation, bylaws,
        certificates of limited partnership, limited partnership agreement, certificate
        of formation, or limited liability company agreement, as currently in
        effect.
  (b)  Execution,
        Delivery and Enforceability .
        Each of
        Seller, TOPIII and Seller’s Parent has the requisite organizational power to
        enter into, and to carry out its respective obligations under, this Agreement
        and the Related Agreements which are executed by Seller, TOPIII or Seller’s
        Parent, as the case may be. The execution and delivery of this Agreement
        and the
        Related Agreements which are executed by Seller, TOPIII or Seller’s Parent, as
        the case may be, and the consummation of the transactions contemplated hereby
        and thereby, have been duly authorized by all organizational action required
        on
        the part of Seller (including all necessary action required on the part of
        Seller’s GP), TOPIII (including all necessary action required on the part of
        TOPIII’s GP) and Seller’s Parent. Assuming Purchaser’s and Purchaser’s Parent’s
        due authorization, execution and delivery of this Agreement and the Related
        Agreements which are executed by Purchaser or Purchaser’s Parent, as the case
        may be, this Agreement and the Related Agreements which are executed by Seller,
        TOPIII or Seller’s Parent, as the case may be, have been duly and validly
        executed and delivered by Seller’s GP on behalf of Seller, by TOPIII’s GP on
        behalf of TOPIII or by Seller’s Parent and constitute the valid and legally
        binding obligations of Seller, TOPIII and Seller’s Parent, as applicable,
        enforceable against Seller, TOPIII and Seller’s Parent, as the case may be, in
        accordance with its and their terms, except as such enforceability may be
        limited by bankruptcy, insolvency, reorganization, moratorium or other similar
        laws of general application relating to or affecting the enforcement of
        creditors’ rights and by general equitable principles.
  (c)  No
        Violation .
        Subject
        to Seller and TOPIII obtaining all required consents and approvals set forth
        on
        Schedule 5.3(a) “Seller’s and TOPIII’s Required Consents and Approvals,” neither
        the execution and delivery of this Agreement or any of the Related Agreements
        executed by Seller, TOPIII or Seller’s Parent, nor the compliance with any
        provision hereof or thereof, nor the consummation of the transactions
        contemplated hereby or thereby will:
  (1)  violate,
        or conflict with, or result in a breach of any provisions of articles of
        incorporation, bylaws, the certificate of limited partnership, the agreement
        of
        limited partnership, certificate of formation, or limited liability company
        agreement, as applicable, of Seller, TOPIII or Seller’s Parent;
  (2)  violate
        any law or regulation applicable to Seller, TOPIII or Seller’s Parent or any
        agreement, instrument or obligation applicable to any Asset or to which Seller,
        TOPIII or Seller’s Parent is a party or is subject, which violation would
        reasonably be expected to have a Material Adverse Effect (with respect to
        the
        Assets, Seller, TOPIII or Seller’s Parent);
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 (3)  be
        rendered void or ineffective by or under the terms, conditions or provisions
        of
        any agreement, instrument or obligation to which Seller, TOPIII or Seller’s
        Parent is a party or is subject, which result would reasonably be expected
        to
        have a Material Adverse Effect (with respect to the Assets, Seller, TOPIII
        or
        Seller’s Parent);
  (4)  result
        in
        a default under the terms, conditions or provisions of any agreement instrument
        or obligation relating to or burdening any of the Assets or create any lien
        or
        encumbrance upon any such Asset, which default, lien or encumbrance would
        reasonably be expected to have a Material Adverse Effect (with respect to
        the
        Assets, Seller, TOPIII or Seller’s Parent); or
  (5)  result
        in
        the cancellation, forfeiture, revocation, suspension or adverse modification
        of
        any Permit relating to the Facility and that is otherwise transferable in
        accordance herewith, which action would reasonably be expected to have a
        Material Adverse Effect (with respect to the Assets).
  (d)  No
        Consents .
        Subject
        to Seller or TOPIII obtaining the consents and approvals set forth on Schedule
        5.3(a) “Seller’s and TOPIII’s Required Consents and Approvals,” there is no
        consent or approval of, filing with, or notice to any Person which is required
        to be obtained or made by Seller, TOPIII and/or Seller’s Parent in connection
        with Seller’s, TOPIII’s or Seller’s Parent’s execution, delivery and performance
        of this Agreement and the Related Agreements which are executed by Seller,
        TOPIII and/or Seller’s Parent, or the consummation of the transactions
        contemplated hereby or thereby, which, if not obtained or made, will prevent
        Seller, TOPIII and/or Seller’s Parent from performing their respective
        obligations hereunder or thereunder.
  3.2  Reserved .
  3.3  Compliance
        with Laws .
        To the
        Seller’s and/or TOPIII’s Knowledge and except as set forth on Schedule 3.3
“Compliance Exceptions,” (a) Seller, TOPIII, the Facility and the Owned Property
        are in compliance with all laws in effect as of the Effective Date (and for
        purposes of Section 6.2, all laws in effect as of the Closing Date), including
        Environmental Laws, zoning and subdivision laws, ordinances and regulations,
        building codes and regulations, and setback requirements, applicable to the
        conduct of the business or operations of Seller and TOPIII (to the extent
        TOPIII’s business conduct or operations relate to the Assets) as presently
        conducted, the use, ownership, operation or maintenance of the Facility or
        the
        use of the Owned Property and the Assets, except for such non-compliance
        as
        would not reasonably be expected, individually or in the aggregate, to have
        a
        Material Adverse Effect, and (b) Seller, TOPIII, the Facility and the Owned
        Property have all governmental Permits from state, federal or local and any
        foreign authorities (including, but not limited to, the Permits set forth
        on
        Schedule 2.1(d) “Permits” hereto), which are required for Seller and TOPIII to
        own, operate and maintain the Facility, except for those the absence of which
        would not reasonably be expected, individually or in the aggregate, to have
        a
        Material Adverse Effect.
  3.4  Permits .
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 (a)  Seller,
        TOPIII and the Facility have all Permits (including without limitation, all
        Permits required under applicable Environmental Laws in effect as of the
        Closing
        Date) necessary to own, operate and maintain the Facility and the Assets,
        except
        where the failure to have such Permits commenced prior to the Initial Closing
        Date or would not reasonably be expected, individually or in the aggregate,
        to
        have a Material Adverse Effect. Except as disclosed on Schedule 3.4(a) “Permit
        Non-Compliance,” Seller, TOPIII and the Facility are in compliance with all
        Permits, except where non-compliance would not reasonably be expected,
        individually or in the aggregate, to have a Material Adverse
        Effect.
  (b)  Schedule
        2.1(d) “Permits” sets forth a true, accurate and complete list of all
        Permits.
  3.5  Environmental
        Matters .
  (a)  Except
        as
        disclosed on Schedule 3.5(a) “Environmental Audits and Reports Not Provided to
        Purchaser,” Seller and TOPIII have provided to Purchaser true, complete and
        accurate copies of all environmentally related audits, studies, reports,
        analyses and results of investigations that have been performed with respect
        to
        the Assets by or on behalf of Seller, TOPIII or their respective Affiliates
        on
        or after the Initial Closing Date.
  (b)  Except
        as
        set forth on Schedule 3.5(b) “Environmental Matters”:
  (1)  No
        Order
        has been issued, no complaint has been filed, no penalty has been assessed
        and
        no investigation or review is pending or, to Seller’s and TOPIII’s Knowledge,
        threatened by any Governmental Authority with respect to any alleged failure
        by
        Seller, TOPIII or the Facility on or after the Initial Closing Date to have
        any
        Permit required in connection with the ownership, operation or maintenance
        of
        the Facility or the Assets or with respect to any treatment, storage, recycling,
        transportation, disposal or release as defined in 42 U.S.C. ss.9601(22), of
        any Hazardous Materials, and Seller and TOPIII have no Knowledge of any facts
        or
        circumstances which would reasonably be expected to form the basis for any
        such
        Order, complaint, penalty or investigation.
  (2)  Seller,
        TOPIII and their respective Affiliates have not Released or caused the Release
        of any Hazardous Materials at, on, under or over the Owned Property on or
        after
        the Initial Closing Date, and there are no aboveground or underground storage
        tanks installed on or after the Initial Closing Date, active or abandoned,
        at,
        on or under the Owned Property.
  (3)  Seller,
        TOPIII and their respective Affiliates have not transported or arranged for
        the
        transportation, on or after the Initial Closing Date, of any Hazardous Material
        from the Owned Property to any location which is the subject of any action
        or
        proceeding that could lead to claims against Purchaser, Seller or TOPIII
        for
        clean-up costs, Remediation, damages to natural resources or personal injury
        claims, including, but not limited to, claims under CERCLA.
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 (4)  No
        oral
        or written notification of a Release of a Hazardous Material has been filed
        by
        or on behalf of Seller, TOPIII or their respective Affiliates on or after
        the
        Initial Closing Date and no Owned Property is listed or, to Seller’s or TOPIII’s
        Knowledge, proposed for listing on the National Priorities List promulgated
        pursuant to CERCLA or on any similar state list of sites requiring investigation
        or clean-up.
  (5)  To
        Seller’s or TOPIII’s Knowledge, there are no Liens (other than Permitted Liens)
        arising under or pursuant to any Environmental Law or Order on any of the
        Owned
        Property, and no action of any Governmental Authority has been taken or,
        to
        Seller’s or TOPIII’s Knowledge, is in process which could subject any of the
        Owned Property to such Liens, neither Seller nor TOPIII would be required
        to
        place any notice or restriction relating to the presence of Hazardous Material
        at any Owned Property in any deed to such Owned Property, in each case to
        the
        extent relating to matters arising on or after the Initial Closing
        Date.
  3.6  Litigation .
        Except
        for any matters set forth on Schedule 3.6 “Seller’s and TOPIII’s Litigation,”
there are no pending or, to the Knowledge of Seller and/or TOPIII, threatened
        actions, investigations or requests for information by any Governmental
        Authority or Third Party with respect to Seller, TOPIII (to the extent such
        actions, investigations or requests for information involving TOPIII relate
        to
        the Assets) or the Assets. Except as set forth on Schedule 3.6 “Seller’s and
        TOPIII’s Litigation,” there are no employee-related or personal injury claims,
        or any pending or, to the Knowledge of Seller and/or TOPIII, threatened
        litigation, claims, investigations or proceedings, private or governmental,
        which directly and specifically relate to the Assets or Seller’s or TOPIII’s
        ownership, management, operation, use or maintenance of the Facility (including
        the Assigned Contracts).
  Except
        as
        set forth on Schedule 3.6 “Seller’s and TOPIII’s Litigation,” there are no
        pending or, to the Knowledge of Seller and/or TOPIII, threatened actions,
        investigations or requests for information by any Governmental Authority
        or
        Third Party, which would reasonably be expected to result, or has resulted,
        in
        (a) the institution of legal proceedings to prohibit or restrain the performance
        of this Agreement or any of the Related Agreements, or the consummation of
        the
        transactions contemplated hereby or thereby, or (b) a claim for damages as
        a
        result of this Agreement or any of the Related Agreements, or the consummation
        of the transactions contemplated hereby or thereby. Except as set forth on
        Schedule 3.6 “Seller’s and TOPIII’s Litigation,” there is no pending or, to the
        Knowledge of Seller and/or TOPIII, threatened litigation, claim, investigation
        or proceeding, private or governmental, which would reasonably be expected
        to
        result, or has resulted, in a material impairment of Seller’s and/or TOPIII’s
        ability to consummate the transactions or perform their respective obligations
        contemplated by this Agreement and the Related Agreements.
  3.7  Zoning
        and Condemnation .
        Except
        as set forth on Schedule 3.7 “Notices of Government Action,” there are no
        pending proceedings or actions to modify the zoning classification of, or
        to
        condemn or take by power of eminent domain, or to classify as a landmark,
        all or
        any part of the Assets. Seller and TOPIII have no Knowledge of any such
        threatened proceeding or action, which (in either case), if pursued, would
        reasonably be expected to have a Material Adverse Effect (with respect to
        the
        Assets). In addition, except as set forth on Schedule 3.7 “Notices of Government
        Action,” Seller and TOPIII have no Knowledge of any proceeding or action to
        modify the zoning classification of, or to condemn or take by power of eminent
        domain, or to classify as a landmark, all or any part of the Assets, which,
        if
        pursued,
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 would
        reasonably be expected to have a Material Adverse Effect (with respect to
        the
        Assets). The Owned Property is properly zoned for the existence, occupancy
        and
        use of all of the Improvements. None of the Improvements are subject to any
        conditional use permits or “permitted non-conforming use” or “permitted
        non-conforming structure” classifications or similar permits or
        classifications.
  3.8  Brokers .
        Except
        for the Investment Banker, whose fees will be payable by Seller pursuant
        to
        Section 5.6(f) “Seller’s and TOPIII’s Closing Costs,” all negotiations relating
        to this Agreement and the transactions contemplated hereby have been carried
        on
        by Seller, TOPIII and their counsel without the intervention of any other
        Person
        and in such a manner as not to give rise to any claim against Purchaser (by
        reason of Seller’s, TOPIII’s or their counsel’s actions) for a brokerage
        commission, finder’s fee or other like payment to any Person (including, without
        limitation, real estate brokers or salesmen).
  3.9  Contracts .
  (a)  Schedule
        3.9(a) “Assigned Contracts” sets forth a true, accurate and complete list of all
        Assigned Contracts, and Seller has provided to Purchaser a true, accurate
        and
        complete copy of each of the Assigned Contracts.
  (b)  Except
        as
        set forth on Schedule 3.9(b) “Contract Defaults or Termination,”
(i) neither Seller nor TOPIII has received notice from a Third Party that
        it intends to cancel or terminate any Assigned Contract, or that Seller or
        TOPIII is in default in any respect under any material terms, conditions
        or
        provisions of any Assigned Contract, (ii) to Seller’s Knowledge or TOPIII’s
        Knowledge, the other party to any Assigned Contract is not in default in
        any
        respect under any material terms, conditions or provisions of any Assigned
        Contract and no event has occurred which (whether with or without notice,
        lapse
        of time, or both) would constitute a default by Seller or TOPIII or, to Seller’s
        Knowledge or TOPIII’s Knowledge, any other parties thereunder, and (iii) as of
        the Effective Date (and for purposes of Section 6.2, as of the Closing Date),
        each of the Assigned Contracts is in full force and effect and are valid,
        binding and enforceable against Seller or TOPIII, as the case may be, in
        accordance with their respective terms.
  3.10  Assets
        Used in the Operation of the Facility .
        The
        Assets, as set forth on Schedule 3.10 “Assets to be Obtained by Purchaser,”
include all material assets and properties owned or leased by Seller or TOPIII
        that are necessary for the ownership, operation or maintenance of the Facility
        as currently operated and maintained by Seller and otherwise in accordance
        with
        Prudent Utility Practice with the exception of the following: (a)
        non-transferable authorizations, consents, licenses, permits, Orders, variances,
        approvals and applications, or other agreements for which a required approval
        of
        a Third Party is not obtained and (b) the Excluded Assets. Except as expressly
        set forth in this Agreement and the Related Agreements, neither Seller nor
        TOPIII shall retain any right or interest in any of the Assets after the
        Closing
        Date. As of the Effective Date and the Closing Date, the Assets, including
        without limitation, the level of spare parts inventory included in the Assets,
        are consistent with Seller’s operation and maintenance of the Facility during
        the eighteen (18) months preceding the Effective Date and otherwise are at
        levels consistent with Prudent Utility Practices.
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 3.11  Bankruptcy .
        No
        bankruptcy, reorganization or arrangement proceedings are pending against,
        being
        contemplated by, or, to Seller’s Knowledge, TOPIII’s Knowledge or Seller’s
        Parent’s Knowledge threatened against Seller, TOPIII or Seller’s
        Parent.
  3.12  Reserved .
  3.13  Non-Infringement .
        Except
        as set forth in Schedule 3.13 “Infringement Claims,” (a) to Seller’s Knowledge,
        Seller’s current use and operation of the Assets does not infringe on the rights
        of any Person, and (b) Seller and TOPIII have not received notice from any
        Person that Seller’s current use and operation of the Assets infringes or is
        claimed to infringe on the rights of any Person.
  3.14  Mechanics’
        Liens .
        Except
        as set forth on Schedule 3.14 “Mechanics’ Liens,” there are no sums due or owing
        for labor or materials furnished to, or with respect to, the Real Property
        Interests or any Asset constituting an improvement or fixture for or on behalf
        of Seller which could give rise to a mechanic’s or materialman’s lien that will
        not be paid in the ordinary course of business prior to the Closing Date
        (subject to Seller’s right to contest the same in good faith).
  3.15  Title
        to the Assets .
        Each of
        Seller and TOPIII has good and marketable title to all of the Assets consisting
        of personal property it respectively owns and each has the full right to
        sell,
        convey, transfer and assign such Assets to Purchaser. Collectively, Seller
        and
        TOPIII own all of such Assets. Such Assets are free and clear of all Liens,
        other than Permitted Liens. To Seller’s and TOPIII’s Knowledge, Seller has good
        and indefeasible title to all of the Assets consisting of Owned Property
        and has
        the full right to sell, convey, transfer and assign such Assets to Purchaser.
        To
        Seller’s and TOPIII’s Knowledge, such Assets are free and clear of all Liens,
        other than Permitted Liens.
  3.16  Reserved .
  3.17  Real
        Property Interests .
  (a)  The
        real
        property interests (collectively, “Real Property Interests”) set forth in the
        exhibits to the Special Warranty Deed, Schedule 1.3-A “Legal Description of the
        Site,” Schedule 1.3-B “Legal Description of the Well Sites,” Schedule 2.1(b)
“Improvements, Buildings, Structures and Equipment,” Schedule 2.1(c) “Other Real
        Property Rights,” and Schedule 3.9(a) “Assigned Contracts” constitute all
        material easements, rights of way, profits-a-prendre, licenses, use or occupancy
        agreements, covenants running with the land and other rights held by or in
        favor
        of Seller or TOPIII, as the case may be, or to which Seller or TOPIII is
        a party
        which relate to the Facility or the use, ownership, operation or maintenance
        thereof, with the exception of (a) the reservations in the Special Warranty
        Deed and (b) the Excluded Assets.
  (b)  Schedule
        1.3-A “Legal Description of the Site” and Schedule 1.3-B “Legal Description of
        the Well Sites” legally describe the Owned Property fully, accurately and
        adequately, and the legal and other descriptions of the Real Property Interests
        included in or attached to the Special Warranty Deed describe the Real Property
        Interests fully, accurately and adequately. Except as set forth in Schedule
        3.17
“Real Property Disclosures,” as the same may be amended no less than ten (10)
        days prior to the Closing Date, there are (i) no pending or, to
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 Seller’s
        or TOPIII’s Knowledge, threatened public improvements or special assessments
        that would affect the Real Property Interests or that could result in any
        charge
        being levied or assessed, or in the creation of any lien, against the Real
        Property Interests; (ii) no encroachments of Improvements located on the
        Owned
        Property onto adjoining lands or onto any easement or right-of-way that burdens
        the Owned Property, nor any material encroachments onto the Owned Property
        of
        any improvements, fixtures, buildings, structures or fences located on adjoining
        lands; (iii) no mining, mineral or water extraction or development projects
        in
        progress on or under the Owned Property or any portion thereof (other than
        projects under the Fuel Agreement); (iv) no claim that Seller’s or TOPIII’s
        right to use gas, electricity, water and telephone necessary for operation
        of
        the Improvements or Seller’s or TOPIII’s right to vehicular access from the
        nearest public road to the Improvements violates the rights of any Person
        or
        Seller’s or TOPIII’s rights thereunder have lapsed or been abandoned or
        terminated or will lapse or be abandoned or terminated if Seller or TOPIII
        fails
        to use said rights for a specific period of time; (v) no pending claims by
        Third
        Persons exercising or, to Seller’s or TOPIII’s Knowledge, no threatened claims
        by Third Persons to exercise any right to cancel or terminate any of the
        Real
        Property Interests; (vi) no defaults by Seller or TOPIII under any terms,
        conditions or provisions of any of the Real Property Interests; (vii) no
        pending
        claims by Third Parties exercising or, to Seller’s or TOPIII’s Knowledge, no
        threatened claims by Third Parties to exercise their rights under a Lien
        or
        reservation affecting the Real Property Interests; (viii) no claims that
        Seller
        or TOPIII does not have the legal right to maintain the Improvements on the
        Real
        Property Interests where the Improvements are currently located; (ix) no
        leases,
        subleases, easements, licenses, concessions, use or occupancy agreements
        or
        other agreements (written or oral) granting to any Person the right to use
        or
        occupy the Real Property Interests or granting to any Person a right or interest
        in any of the Real Property Interests, except for Permitted Liens; (x) no
        outstanding options, rights of first offer, rights of first refusal or rights
        of
        first negotiation or other options or rights to purchase the Real Property
        Interests or any portion thereof or interests therein; (xi) no arrangements
        or
        commitments of any kind pursuant to which the Real Property Interests (or
        any
        portion thereof or interest therein) will become subject to any Liens; and
        (xii)
        no parties (other than Seller or TOPIII) in possession of the Owned Property,
        other than parties in possession pursuant to Permitted Liens.
  (c)  The
        Owned
        Property does not serve any adjoining property for any purpose inconsistent
        with
        the current use of the Owned Property, and no portion of the Owned Property
        is
        located within any flood plain or subject to any similar type restriction
        for
        which any permit or license necessary to the current use thereof has not
        been
        obtained. The Owned Property (and any non-contiguous portion thereof) abuts
        on
        and has direct vehicular access to a public road, or has access to a public
        road
        via a permanent, irrevocable, appurtenant easement benefiting the Owned Property
        (and any non-contiguous portion thereof), and access to the Owned Property
        (and
        any non-contiguous portion thereof) is provided by public right-of-way. All
        facilities located on the Owned Property are supplied with utilities and
        other
        services necessary for the use, ownership, operation or maintenance of the
        Facility, including gas, electricity, water, telephone and septic systems,
        all
        of which services are adequate in accordance with all applicable laws,
        ordinances, rules and regulations and are provided via public roads or via
        permanent, irrevocable, appurtenant easements benefiting such land. To Seller’s
        Knowledge, the Improvements are structurally sound and free of all material
        defects and the roofs, foundations, elevators, heating, air conditioning
        and
        ventilation systems, plumbing and electrical systems, boilers, furnaces and
        sprinkler systems are in good repair and working order. Except as set forth
        in
        Schedule 3.17
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 “Real
        Property Disclosures,” as the same may be amended no less than ten (10) days
        prior to the Closing Date, Seller is the owner of record title to 100% of
        the
        Owned Property. True and correct copies of any current surveys, abstracts
        or
        title opinions in the possession of Seller, TOPIII or their respective agents
        or
        representatives, and any policies of title insurance currently in force and
        in
        the possession of Seller, TOPIII or their respective agents or representatives
        with respect to the Owned Property have heretofore been made available to
        Purchaser.
  (d)  To
        Seller’s or TOPIII’s Knowledge, there have been no material changes on the
        ground since the Initial Closing Date that would be shown on an update of
        the
        ALTA Survey delivered to Seller in connection with the 2002 Purchase and
        Sale
        Agreement that would reasonably be expected to have a Material Adverse Effect
        on
        the Owned Property or the Real Property Interests
  (e)  In
        no
        event shall any of the foregoing representations in this Section 3.17 be
        deemed
        breached to the extent they are not true as a result of facts or circumstances
        existing prior to the Initial Closing Date, or because they would not have
        been
        true had they been given by the seller under the 2002 Purchase and Sale
        Agreement to Seller as the purchaser thereunder.
  3.18  Insurance .
        Except
        as set forth in Schedule 3.18 “Insurance,” all policies of fire, liability,
        workers’ compensation and all other forms of insurance owned or held by or on
        behalf of Seller or TOPIII with respect to the Assets and Seller’s Employees are
        in full force and effect, all premiums with respect thereto covering all
        periods
        up to and including the Closing Date have been paid (other than retroactive
        premiums which may be payable with respect to comprehensive general liability
        and workers’ compensation insurance policies), and no notice of cancellation or
        termination has been received with respect to any such policy which was not
        replaced on substantially similar terms prior to the date of such cancellation.
        Except as described in Schedule 3.18 “Insurance,” within the thirty-six (36)
        months preceding Effective Date, neither Seller nor TOPIII has been refused
        any
        insurance with respect to the Assets nor has coverage been limited by any
        insurance carrier to which either Seller or TOPIII has applied for any such
        insurance or with which any Seller has carried insurance during the last
        twelve
        (12) months. For purposes of this Section 3.18 “Insurance,” insurance quoted at
        commercially unreasonable premiums which either Seller or TOPIII chose not
        to
        purchase shall not be deemed a refusal by an insurance carrier.
  3.19  Labor
        Matters .
  (a)  Schedule
        3.19(a) “Seller’s Employees,” sets forth a true, accurate and complete list of
        all employees of Seller employed at the Facility (including individuals on
        vacation, short-term disability or similar leave) as of the Effective Date
        (“Seller’s Employees”), which such Schedule shall be amended as of the Closing
        Date to include such employees so employed immediately prior to the Closing
        Date. Such Schedule shall also include a description of each Seller Employee’s
        current base salary, target bonus for the 2005 fiscal year (if any), position
        and date of hire.
  (b)  None
        of
        Seller’s Employees are covered by any collective bargaining or union contracts.
        With respect to the business or operations of the Facility and the Assets,
        except to the extent set forth in Schedule 3.19(b) “Labor Matters” and except
        for such matters which would
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 not
        reasonably be expected, individually or in the aggregate, to create a Material
        Adverse Effect, (i) Seller is in compliance with all applicable laws respecting
        labor and labor practices, employment and employment practices, terms and
        conditions of employment and wages and hours; (ii) Seller has no Knowledge
        of
        any threatened action against Seller and has not received notice of any unfair
        labor practice complaint against Seller pending before the National Labor
        Relations Board; (iii) no arbitration proceeding arising out of or under
        any
        collective bargaining agreements is pending against Seller; (iv) Seller has
        not
        experienced any work stoppage within the three-year period prior to the date
        hereof and, to Seller’s Knowledge, none is currently threatened; and (v) Seller
        has no Knowledge of any threatened action against Seller and has not received
        notice of any unfair employment practice complaint pending against Seller
        before
        any federal or state authority.
  3.20  [ Reserved ].
  3.21  Taxes .
        Seller
        and TOPIII have filed all Tax Returns that are required to be filed by it
        with
        respect to any Tax relating to the Assets, and Seller and TOPIII have paid
        all
        Taxes that have become due as indicated thereon, except where such Tax is
        being
        contested in good faith by appropriate proceedings, or where the failure
        to so
        file or pay would not reasonably be expected to create a Material Adverse
        Effect. Seller and TOPIII have complied in all material respects with all
        applicable laws, rules and regulations relating to withholding Taxes relating
        to
        Seller’s Employees. All Tax Returns relating to the Assets are true, correct and
        complete in all material respects. Except as set forth in Schedule 3.21 “Tax
        Matters,” no notice of deficiency or assessment has been received from any
        taxing authority with respect to liabilities for Taxes of Seller and TOPIII
        in
        respect of the Assets, which have not been fully paid or finally settled,
        and
        any such deficiency shown in Schedule 3.21 “Tax Matters” is being contested in
        good faith through appropriate proceedings. Except as set forth in Schedule
        3.21
“Tax Matters,” there are no outstanding agreements or waivers extending the
        applicable statutory periods of limitation for Taxes associated with the
        Assets
        that will be binding upon Purchaser after the Closing Date. None of the Assets
        is property that is required to be treated as being owned by any other person
        pursuant to the so-called safe harbor lease provisions of former Section
        168(f)
        of the Code, and none of the Assets is “tax-exempt use” property within the
        meaning of Section 168(h) of the Code. Schedule 3.21 “Tax Matters” sets forth
        the taxing jurisdictions in which Seller and TOPIII own assets or conducts
        business that require a notification to a taxing authority of the transactions
        contemplated by this Agreement, if the failure to make such notification
        or
        obtain Tax clearance certificates in connection therewith would either require
        Purchaser to withhold any portion of the Purchase Price or subject Purchaser
        to
        any liability for any Taxes of Seller or TOPIII.
  3.22  Intellectual
        Property .
        Schedule 2.1(i) “Intellectual Property,” sets forth all Intellectual Property
        used in and, individually or in the aggregate with other Intellectual Property,
        that is material to the operation or business of the Facility and the Assets.
        Except as disclosed in Schedule 2.1(i) “Intellectual Property,” (a) Seller is
        not, nor has Seller received any notice that it is, in default (or with the
        giving of notice or lapse of time or both, would be in default), under any
        contract to use such Intellectual Property, and to Seller’s Knowledge, such
        Intellectual Property is not being infringed by any other Person. Seller
        has not
        received notice that it is infringing any Intellectual Property of any other
        Person in connection with the operation or business of the Facility or the
        Assets, and, to Seller’s Knowledge, Seller is not infringing any Intellectual
        Property of any other Person the effect of which, individually or in the
        aggregate, would reasonably be expected to have a Material Adverse
        Effect.
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 3.23  Capital
        Expenditures .
        Except
        as set forth in Schedule 3.23 “Capital Expenditures,” there are no Capital
        Expenditures associated with the Assets that are planned by Seller and/or
        TOPIII
        from the Effective Date through the Closing Date.
  3.24  Facility
        Performance .
        As of
        the Effective Date and the Closing Date, to Seller’s Knowledge: (a) the Facility
        is capable of producing 305 megawatts of net electrical output at full load,
        and
        at full load, the Facility’s heat rate is 11,300 Btu/kWh. Seller has provided
        documentation satisfactory to Purchaser which evidences such net electrical
        output capacity and heat rate.
  3.25  Disclosure .
        All
        documents, reports or other written information pertaining to Seller, TOPIII,
        the Assets or the Facility that have been furnished to Purchaser by or on
        behalf
        of Seller or TOPIII are true and correct in all material respects and do
        not
        contain any untrue statement of a material fact or omit to state any material
        fact necessary to make the statements contained therein not misleading. To
        Seller’s Knowledge and to TOPIII’s Knowledge, there is no fact, event or
        circumstance that has not been disclosed to Purchaser in writing, the existence
        of which would reasonably be expected to have a Material Adverse
        Effect.
  ARTICLE
        IV
  REPRESENTATIONS
        AND WARRANTIES OF PURCHASER AND PURCHASER’S PARENT
  Purchaser
        and Purchaser’s Parent represent and warrant to Seller and TOPIII as follows, as
        of the Effective Date and as of the Closing Date:
  4.1  Transaction
        Representations .
  (a)  Organization
        and Existence .
        Purchaser is a limited partnership duly organized, validly existing and in
        good
        standing under the laws of the State of Texas. Purchaser’s general partner,
        ALTURA POWER GP, LLC (“Purchaser’s GP”) is a limited liability company duly
        organized, validly existing and in good standing under the laws of the State
        of
        Delaware. Purchaser’s Parent is a corporation duly organized, validly existing
        and in good standing under the laws of the State of New Mexico. Each of
        Purchaser and Purchaser’s Parent is duly qualified to do business as a limited
        partnership or corporation, respectively, in each other jurisdiction where
        its
        business as now being conducted shall require it to be qualified, except
        where
        the failure to be so qualified would not reasonably be expected to have a
        material adverse effect on Purchaser’s or Purchaser’s Parent’s ability, as the
        case may be, to consummate the transactions or perform its obligations
        contemplated by this Agreement and the Related Agreements. Each of Purchaser
        and
        Purchaser’s Parent has heretofore delivered to Seller and TOPIII true, complete
        and correct copies of its certificate of limited partnership and limited
        partnership agreement and Restated Articles of Incorporation, respectively,
        as
        currently in effect.
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 (b)  Execution,
        Delivery and Enforceability .
        Each of
        Purchaser and Purchaser’s Parent has full partnership or corporate power,
        respectively, to enter into, and to carry out its obligations under, this
        Agreement and the Related Agreements which are executed by Purchaser or
        Purchaser’s Parent, as the case may be. The execution and delivery of this
        Agreement and the Related Agreements which are executed by Purchaser, and
        the
        consummation of the transactions contemplated hereby and thereby, have been
        duly
        authorized by all necessary partnership action required on the part of Purchaser
        (including all necessary action required on the part of Purchaser’s GP). The
        execution and delivery of this Agreement and the Related Agreements which
        are
        executed by Purchaser’s Parent, and the consummation of the transactions
        contemplated hereby and thereby, have been duly authorized by all necessary
        corporate action required on the part of Purchaser’s Parent. Assuming Seller’s,
        TOPIII’s and Seller’s Parent’s due authorization, execution and delivery of this
        Agreement and the Related Agreements which are executed by Seller, TOPIII
        or
        Seller’s Parent, as the case may be, this Agreement and the Related Agreements
        which are executed by Purchaser or Purchaser’s Parent, as the case may be, have
        been duly and validly executed and delivered by Purchaser’s GP on behalf of
        Purchaser or Purchaser’s Parent, as the case may be, and constitute the valid
        and legally binding obligations of Purchaser or Purchaser’s Parent, as the case
        may be, enforceable against Purchaser or Purchaser’s Parent, as the case may be,
        in accordance with its and their terms, except as such enforceability may
        be
        limited by bankruptcy, insolvency, reorganization, moratorium or other similar
        laws of general application relating to or affecting the enforcement of
        creditors’ rights and by general equitable principles.
  (c)  No
        Violation .
        Subject
        to the Parties satisfying their respective obligations to obtain or process
        (as
        applicable) the authorizations, consents, licenses, permits, Orders, variances,
        approvals and applications described in Section 5.3 “Consents and Approvals,”
neither the execution and delivery of this Agreement or any of the Related
        Agreements executed by Purchaser or Purchaser’s Parent, as the case may be, nor
        the compliance with any provision hereof or thereof, nor the consummation
        of the
        transactions contemplated hereby or thereby will:
  (1)  violate
        or conflict with, or result in a breach of any provisions of the organizational
        documents of Purchaser or Purchaser’s Parent, as the case may be;
  (2)  violate
        any material law, Order, judgment, decree or regulation applicable to Purchaser
        or Purchaser’s Parent, as the case may be; or
  (3)  be
        rendered void or ineffective by or under the terms, conditions or provisions
        of
        any agreement, instrument or obligation to which the Purchaser or Purchaser’s
        Parent, as the case may be, is a party or is subject.
  (d)  No
        Consents .
        Subject
        to Purchaser obtaining the consents and approvals set forth on Schedule 5.3(c)
        “Purchaser’s Required Consents,” no consent or approval of, filing with, or
        notice to any Person is required to be obtained or made by Purchaser or
        Purchaser’s Parent in connection with Purchaser’s or Purchaser’s Parent’s
        execution, delivery and performance of any of this Agreement and the Related
        Agreements which are executed by Purchaser or Purchaser’s Parent, as the case
        may be, or the consummation of the transactions contemplated hereby or thereby,
        which, if not obtained or made, will prevent Purchaser or Purchaser’s Parent
        from performing its obligations hereunder or thereunder.
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 4.2  Litigation .
        Except
        as set forth on Schedule 4.2 “Purchaser’s Litigation,” there are no pending or,
        to Purchaser’s and Purchaser’s Parent’s Knowledge, threatened actions,
        investigations or requests for information by any Governmental Authority
        or
        Third Party, which would reasonably be expected to result, or has resulted,
        in
        (a) the institution of legal proceedings to prohibit or restrain the performance
        of this Agreement or any of the Related Agreements, or the consummation of
        the
        transactions contemplated hereby or thereby, or (b) a claim for damages as
        a
        result of this Agreement or any of the Related Agreements, or the consummation
        of the transactions contemplated hereby or thereby. Except as set forth on
        Schedule 4.2 “Purchaser’s Litigation,” there is no pending or, to Purchaser’s
        and Purchaser’s Parent’s Knowledge, threatened litigation, claim, investigation
        or proceeding, private or governmental, which would reasonably be expected
        to
        result, or has resulted, in a material impairment of either of Purchaser’s or
        Purchaser’s Parent’s ability to consummate the transactions or perform its
        obligations contemplated by this Agreement and the Related
        Agreements.
  4.3  Brokers .
        Except
        for any advisors to Purchaser and/or Purchaser’s Parent, whose fees will be
        payable by Purchaser pursuant to Section 5.6(e) “Purchaser’s Closing Costs,” all
        negotiations relating to this Agreement and the transactions contemplated
        hereby
        have been carried on by Purchaser, Purchaser’s Parent and their counsel without
        the intervention of any other Person and in such a manner as not to give
        rise to
        any claim against Seller or TOPIII (by reason of Purchaser’s, Purchaser’s
        Parent’s or their counsel’s actions) for a brokerage commission, finder’s fee,
        or other like payment to any Person.
  4.4  Sufficient
        Funds .
        Purchaser and/or Purchaser’s Parent has sufficient funds available to consummate
        the transactions contemplated hereby in accordance with the terms of this
        Agreement.
  4.5  Bankruptcy .
        No
        bankruptcy, reorganization or arrangement proceedings are pending against,
        being
        contemplated by, or, to Purchaser’s and Purchaser’s Parent’s Knowledge,
        threatened against Purchaser or Purchaser’s Parent.
  ARTICLE
        V
  CERTAIN
        AGREEMENTS
  5.1  Purchaser’s
        Acknowledgement and Agreement .
  (a)  Purchaser
        understands the methods by which power will be provided to the station loads
        during individual unit outages. Unit start up and maintenance power will
        be
        provided through the start-up transformer and power will need to be purchased
        from a retail energy provider and scheduled through ERCOT through a Qualified
        Scheduling Entity for power used by either unit at the Facility during unit
        outages.
  (b)  Purchaser
        will bear all of its own costs, expenses and charges incurred in connection
        with
        its Due Diligence Inspections and Reviews.
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 5.2  “AS
        IS”
SALE. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, AND EXCEPT FOR SELLER’S AND
        TOPIII’S REPRESENTATIONS AND WARRANTIES SET FORTH HEREIN, AND IN THE RELATED
        AGREEMENTS, THE ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE,
        AND IN THEIR CONDITION ON THE CLOSING DATE, AND PURCHASER IS RELYING SOLELY
        ON
        ITS OWN EXAMINATION OF THE ASSETS AND THE PROVISIONS OF THIS AGREEMENT AND
        THE
        RELATED AGREEMENTS. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY
        SET
        FORTH IN THIS AGREEMENT AND THE RELATED AGREEMENTS, PURCHASER DISCLAIMS RELIANCE
        ON ANY REPRESENTATIONS, WARRANTIES OR GUARANTEES, EITHER EXPRESSED OR IMPLIED,
        BY SELLER AND/OR TOPIII, INCLUDING BUT NOT LIMITED TO ANY ORAL, WRITTEN OR
        ELECTRONIC RESPONSE TO ANY INFORMATION REQUESTED BY THE PURCHASER.
  THE
        PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER AND TOPIII HAVE PERMITTED
        PURCHASER TO CONDUCT TO PURCHASER’S SATISFACTION SUCH INVESTIGATION AND
        EXAMINATION OF THE ASSETS, AND THAT THE PURCHASER IS RELYING ON ITS OWN DUE
        DILIGENCE INSPECTIONS AND REVIEWS OF THE ASSETS AS THE PURCHASER REQUESTED
        AND
        DETERMINED IN ITS SOLE DISCRETION TO BE NECESSARY AND SUFFICIENT, AND THAT
        THE
        PURCHASER IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY MADE BY SELLER
        AND/OR
        TOPIII, OR ANY BROKER OR INVESTMENT BANKER, OTHER THAN THE REPRESENTATIONS
        AND
        WARRANTIES OF SELLER AND/OR TOPIII SET FORTH IN THIS AGREEMENT AND THE RELATED
        AGREEMENTS.
  5.3  Consents
        and Approvals .
  (a)  Seller
        and TOPIII, as the case may be, will use Commercially Reasonable Efforts
        to
        obtain all authorizations, consents, Orders, variances, approvals and
        applications listed on Schedule 5.3(a) “Seller’s and TOPIII’s Required Consents
        and Approvals” for the transfer and assignment of the Assets to Purchaser and
        all consents and approvals for the transfer and assignment of all Permits,
        Permit Applications and Assigned Contracts (“Seller’s Required Consents” and
“TOPIII’s Required Consents”). Notwithstanding anything herein to the contrary,
        in connection with obtaining the assignment of the Fuel Agreement, Commercially
        Reasonable Efforts shall not require any action or inaction with respect
        to the
        pending litigation involving the Disputes or any settlement that may take
        place
        in connection therewith.
  (b)  In
        connection with obtaining any Seller’s Required Consents or TOPIII’s Required
        Consents from Third Parties, each Party will use Commercially Reasonable
        Efforts
        to obtain a release of Seller or TOPIII and any of their Affiliates, as
        applicable, as the case may be, from any and all liabilities and obligations
        to
        Third Parties under the Asset being assigned or transferred arising in respect
        of any period occurring after the Closing. In the event a release of Sempra
        and
        any of its Affiliates, as applicable, is not obtained with respect to the
        Fuel
        Agreement and any related agreements and Seller waives its condition precedent
        in Section 7.12, then Purchaser’s Parent shall be required to indemnify, defend
        and hold harmless Sempra Energy and any of its Affiliates, as applicable,
        for
        any payment, loss, liability or expense incurred by Sempra Energy or any
        of its
        Affiliates, as applicable, under the Fuel Agreement or any related agreements
        for any claim made in respect of any period after the Closing Date. Purchaser
        will not reject any transfer (or, as applicable, reissuance) of any Permit,
        approval or application held by Seller or TOPIII with respect to the Facility
        with terms and conditions substantially similar to
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 those
        in
        effect on the Effective Date. Promptly following any request by Purchaser,
        which
        request shall not be made more frequently than once per month, Seller or
        TOPIII
        shall provide a report as to status of their respective Required Consents.
        After
        the Closing, Purchaser, Seller and TOPIII shall notify promptly all relevant
        Governmental Authorities and all Third Parties, as necessary, of the change
        in
        ownership of the Assets resulting from the transactions contemplated herein,
        to
        the extent required by applicable law or the Assigned Contracts.
  (c)  Purchaser
        will use Commercially Reasonable Efforts to obtain those approvals, consents
        or
        Permits listed on Schedule 5.3(c) “Purchaser’s Required Consents” required to be
        obtained by Purchaser from any Governmental Authority which are necessary
        for
        Purchaser to purchase the Assets from Seller and TOPIII and to consummate
        the
        transactions contemplated hereunder and under the Related Agreements
        (“Purchaser’s Required Consents”).
  (d)  Hart-Scott-Rodino .
        The
        Parties will comply with the provisions of the Hart-Scott-Rodino Antitrust
        Improvements Act of 1976 (“HSR Act”) to the extent applicable to the
        transactions contemplated hereunder. Promptly after the Effective Date, the
        Parties will make any required filings under the HSR Act. If any Governmental
        Authority having jurisdiction under the HSR Act requires the filing of any
        additional information with respect to the transactions contemplated hereunder,
        each Party will provide such information in a prompt and diligent manner.
        Purchaser shall pay all filing fees under the HSR Act and each Party will
        bear
        its own costs of the preparation of any filing.
  (e)  Cooperation .
  (1)  Each
        Party will use Commercially Reasonable Efforts to assist the other Party’s
        efforts in obtaining all Seller’s Required Consents, TOPIII’s Required Consents
        and Purchaser’s Required Consents and will reasonably cooperate with the other
        Parties in executing such applications and other documents as are reasonably
        required. In addition, without limiting the foregoing, with respect to Seller’s
        Required Consents relating to the assignment of the Power Agreements and
        the
        Fuel Agreement, Purchaser shall provide the credit support required and will
        use
        Commercially Reasonable Efforts to provide the credit support reasonably
        requested by J.Aron with respect to the J.Aron PPA, by [*] with respect to
        the
        [*] PPA and by Walnut Creek with respect to the Fuel Agreement; provided,
        however, that in each case, the reasonableness of requests for credit support
        shall be determined in light of those practices which are customary and
        reasonable in transactions of the kind and nature contemplated by the respective
        agreement. Each Party will bear its own costs for these applications and
        proceedings except as otherwise provided in Section 5.6 “Taxes, Prorations and
        Closing Costs.” Without limiting the generality of the foregoing, Seller and
        TOPIII will use Commercially Reasonable Efforts to provide Purchaser promptly
        after the Effective Date with current forms of applications, agreements,
        financial assurance documentation and other documentation that must be submitted
        to Governmental Authorities in order for Purchaser to obtain the material
        Permits, variances, approvals and applications listed in Schedule 2.1(d)
        “Permits,” and Seller and TOPIII will make Commercially Reasonable Efforts to
        respond to Purchaser’s questions relating to the process of completing such
        applications, agreements, financial assurance documentation and other
        documentation, and the process of obtaining the transfer or reissuance of
        such
        material Permits, variances, approvals and applications.
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 (2)  After
        the
        Effective Date but prior to the Closing Date, (i) Seller shall have the right
        to
        continue to control the prosecution and any settlement of (A) the litigation
        in
        connection with the dispute with Walnut Creek Mining Company (“Walnut Creek”)
        regarding the Fuel Agreement, provided,
        however, that prior to the commencement of the jury trial currently anticipated
        to begin on January 23, 2006, Seller and Purchaser shall endeavor to enter
        into
        such arrangements, including joint defense or other arrangements, as are
        mutually acceptable to Purchaser and Seller and reasonably required consistent
        with applicable rules of legal ethics, in order to permit Purchaser to
        participate in the conduct of such trial while maintaining all recognized
        privileges otherwise available, including the attorney-client privilege,
        the
        attorney work product privilege and any other relevant privilege, (B) any
        negotiation commenced in accordance with Section 6.02 of the Fuel Agreement
        and
        (C) any arbitration commenced in accordance with Section 6.03 of the Fuel
        Agreement (collectively, the “Disputes”), with the counsel of its choice at its
        sole cost and expense; provided that Seller shall consult in good faith with
        Purchaser throughout the course of such litigation, arbitration or settlement,
        and (ii) no settlement of the Disputes shall be made prior to the Closing
        Date
        without the prior written consent of Purchaser, which consent may not be
        unreasonably withheld; provided further that in the event that Seller enters
        into a settlement of the Disputes without the consent of Purchaser, Seller
        and
        Purchaser shall enter into good faith discussions to seek to agree on a possible
        reduction of the Purchase Price, the scope of which must be mutually agreed
        upon
        by the Parties. In the event the Parties are unable to agree on a reduction
        to
        the Purchase Price within ten (10) Business Days of such settlement, then
        Purchaser shall have, as its sole remedy, the right to terminate this Agreement
        pursuant to Section 9.14(a)(6). After the Closing Date, Purchaser shall (i)
        take
        control of the prosecution of the litigation, if any,  the  negotiations
        and the arbitration, if any,  in
        respect of the Disputes at its sole cost and expense and shall keep Seller
        informed of all material developments relating thereto and (ii) have the
        right
        to enter into any settlement of the Disputes; provided that no settlement
        shall
        be made unless it provides a complete release of Seller and its Affiliates
        from
        any and all liabilities and obligations to Walnut Creek and its Affiliates
        arising out of such Disputes.
  (f)  No
        Transfer if Consent or Approval Not Obtained .
  (1)  Neither
        Seller nor TOPIII is obligated to assign or transfer their respective interest
        in a particular Asset or Assets (other than the Fuel Agreement and the Power
        Agreements, the transfers of which are governed by Section 6.15 and Section
        7.12
        below) (or any claim, right or benefit arising under or resulting from such
        Asset or Assets), although Seller or TOPIII may elect to do so, if an assignment
        or transfer or an attempt to make such an assignment or transfer of such
        Asset
        or Assets is (A) without the consent of a Third Party if such consent is
        required for the Asset to be transferred to Purchaser or (B) a violation
        of any
        law, decree, Order or regulation of any Governmental Authority.
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 (2)  Purchaser
        is not required to accept an interest in a particular Asset or Assets (other
        than the Fuel Agreement and the Power Agreements, the transfers of which
        are
        governed by Section 6.15 and Section 7.12 below) (or any claim, right or
        benefit
        arising under or resulting from such Asset or Assets), although Purchaser
        may
        elect to do so, if an assignment or transfer or an attempt to make such an
        assignment or transfer is (A) without the consent of a Third Party if such
        consent is required for the Asset or Assets to be transferred to Purchaser,
        (B)
        a violation of any law, decree, Order or regulation of any Governmental
        Authority or (C) subject to terms and conditions which are materially more
        onerous than those in effect on the Effective Date.
  (3)  Nothing
        contained in this Section 5.3(f) “No Transfer if Consent or Approval Not
        Obtained” shall limit or modify the Parties’ respective obligations under the
        other provisions of this Section 5.3 “Consents and Approvals.”
  5.4  Confidentiality .
  (a)  Each
        Party (and its officers, employees, counsel, representatives and agents)
        agrees
        to be bound by the terms of the Confidentiality Agreement as if set forth
        in
        this Agreement.
  (b)  Upon
        the
        other Party’s prior written approval, which will not be unreasonably withheld,
        either Party may provide Confidential Information to ERCOT, the ISO, PUC,
        FERC,
        SEC or other Governmental Authorities as necessary to comply with Section
        5.3
“Consents and Approvals.” The disclosing Party will seek confidential treatment,
        if possible, for the Confidential Information provided to any Governmental
        Authority and the disclosing Party will notify the other Party as far in
        advance
        as is practicable of its intention to release to any Governmental Authority
        any
        Confidential Information.
  (c)  Survival.
        The Parties’ respective obligations in this Section 5.4 “Confidentiality” and
        under the Confidentiality Agreement shall survive for a period of two (2)
        years
        after the Closing Date or termination of this Agreement, as
        applicable.
  5.5  Cooperation .
        Upon
        reasonable advance written notice by Purchaser to Seller and TOPIII, Seller
        and
        TOPIII shall reasonably cooperate with Purchaser regarding the transition
        of
        ownership, operation and/or maintenance of the Facility and the Assets to
        Purchaser, including access to facilitate Purchaser’s integration of accounting,
        insurance, telecommunications and management information systems and other
        operations at the Facility with Purchaser’s programs and systems. Solely with
        respect to work done by Seller or TOPIII at Purchaser’s request to facilitate
        Purchaser’s integration of its systems and operations described in the preceding
        sentence and to further the separation of the Assets from any of the Excluded
        Assets, Purchaser shall reimburse Seller and TOPIII for their actual reasonable
        costs for the personnel performing such work. After the Closing, each Party
        will, upon the reasonable request of the other Party, execute and deliver
        any
        further instruments or documents of conveyance, assignment, assumption or
        transfer, and take such further actions using Commercially Reasonable Efforts
        as
        may reasonably be required to fulfill and implement the terms of this Agreement
        or realize the benefits intended to be afforded hereby. For a period of three
        (3) years immediately following the Closing Date, Purchaser shall reasonably
        cooperate with Seller and TOPIII regarding the filing of all required documents
        with the PUC, FERC, or any other Governmental Authority to the extent directly
        related to the transactions contemplated hereby. If any Excluded Assets are
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 inadvertently
        delivered to Purchaser, Purchaser will promptly return the same to Seller
        and/or
        TOPIII, as the case may be, to the extent Purchaser obtains Knowledge of
        such
        inadvertent delivery. On the Closing Date, Seller and TOPIII shall deliver
        to
        Purchaser the original drawings, sepias and bluelines related solely to the
        Assets and not located on the Site.
  5.6  Taxes,
        Prorations and Closing Costs .
  (a)  Taxes .
  (1)  Purchaser
        shall pay 50% and Seller shall pay 50% of all transfer and documentary transfer
        Taxes, arising in connection with the transfer of the Assets, including any
        sales or use tax. Seller and Purchaser will each pay their own Income Taxes.
        State and local real and personal property Taxes relating to the Assets for
        the
        tax year ending December 31, 2006 (which taxes are due and payable on or
        before
        January 31, 2007) will be prorated between Purchaser and Seller on the following
        basis: Seller shall be responsible for all such Taxes for the period up to
        the
        Closing Date and Purchaser shall be responsible for all such Taxes for the
        period on and after the Closing Date. All Taxes assessed on an annual basis
        will
        be prorated on the assumption that an equal amount of Taxes applies to each
        day
        of the year, regardless of how any installment payments are billed or made,
        except that Purchaser will bear all supplemental or other state and local
        real
        and personal property Taxes which arise out of a change in ownership of the
        Assets.
  (2)  If
        the
        amount of real and personal property Taxes due for the 2006 tax year (commencing
        January 1, 2006) has not been assessed by the taxing authorities as of the
        Closing Date, then the amount of real and personal property Taxes as prorated
        between Seller and Purchaser for the 2006 tax year will be estimated on the
        basis of the 2005 tax year’s real and personal property taxes and such amount
        will be subject to a true-up adjustment after the Closing Date based upon
        the
        actual amount of Taxes assessed.
  (3)  Seller
        will be entitled to any refunds or credits of Taxes relating to the Assets
        for
        the period after the Initial Closing Date and prior to the Closing Date and
        the
        Purchaser shall be entitled to such refunds or credits of Taxes relating
        to the
        Assets for the period prior to the Initial Closing Date or on and after the
        Closing Date. Each Party will promptly notify and forward to the other Party
        the
        amounts of any such refunds or credits within thirty (30) days after receipt
        thereof.
  (4)  After
        the
        Closing Date, Purchaser will notify Seller and TOPIII in writing, within
        fifteen
        (15) days after its receipt of any correspondence, notice or other communication
        from a taxing authority or any representative thereof, of any pending or
        threatened tax audit, or any pending or threatened judicial or administrative
        proceeding that involves Taxes relating to the Assets for the period after
        the
        Initial Closing Date and prior to the Closing Date, and furnish Seller and
        TOPIII with copies of all correspondence received from any taxing authority
        in
        connection with any audit or information request with respect to any such
        Taxes
        relating to the Assets for the period after the Initial Closing Date and
        prior
        to the Closing Date. After the Closing Date, Seller
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 and
        TOPIII will notify Purchaser in writing, within fifteen (15) days after its
        receipt of any correspondence, notice or other communication from a taxing
        authority or any representative thereof, of any pending or threatened tax
        audit,
        or any pending or threatened judicial or administrative proceeding that involves
        Taxes relating to the Assets for the period prior to the Initial Closing
        Date or
        after the Closing Date, and furnish Purchaser with copies of all correspondence
        received from any taxing authority in connection with any audit or information
        request with respect to any such Taxes relating to the Assets for the period
        prior to the Initial Closing Date or after the Closing Date.
  (5)  Notwithstanding
        any provision of this Agreement to the contrary, with respect to any claim
        for
        refund, audit, examination, notice of deficiency or assessment or any judicial
        or administrative proceeding that involves Taxes relating to the Assets
        (collectively, “Tax Claim”), each Party will reasonably cooperate with the other
        Party in prosecuting and/or contesting any Tax Claim, including making available
        original books, records, documents and information for inspection, copying
        and,
        if necessary, introduction as evidence at any such Tax Claim contest or
        proceeding and making employees available on a mutually convenient basis
        to
        provide additional information or explanation of any material provided hereunder
        with respect to such Tax Claim or to testify at proceedings relating to such
        Tax
        Claim. Seller and TOPIII will control all proceedings taken in connection
        with
        any Tax Claim that pertains entirely to the period after the Initial Closing
        Date and prior to the Closing Date, Purchaser will control all proceedings
        taken
        in connection with any Tax Claim that pertains entirely to the period prior
        to
        the Initial Closing Date or on or after the Closing Date, and Seller, TOPIII
        and
        Purchaser will jointly control all proceedings taken in connection with any
        Tax
        Claim pertaining to the period after the Initial Closing Date and both prior
        to
        and after the Closing Date; provided, however, Purchaser may request that
        Seller
        or TOPIII take any action reasonably necessary to remove any liens or other
        encumbrances on the Assets relating to any Tax Claim that pertains entirely
        to
        the period after the Initial Closing Date and prior to the Closing Date.
        Purchaser has no right to settle or otherwise compromise any Tax Claim which
        pertains entirely to the period after the Initial Closing Date and prior
        to the
        Closing Date; neither Seller nor TOPIII have a right to settle or otherwise
        compromise any Tax Claim which pertains entirely to the period prior to the
        Initial Closing Date or on or after the Closing Date and neither Party has
        the
        right to settle or otherwise compromise any Tax Claim which pertains to the
        period after the Initial Closing Date and both prior to and on or after the
        Closing Date without the other Party’s prior written consent, which consent
        shall not be unreasonably withheld.
  (b)  Income
        and Expenses .
        Except
        as set forth in this Section 5.6 “Taxes, Prorations and Closing Costs,” all
        items of income and expense, including rents and other charges under the
        Assigned Contracts, in each case, for the period prior to the Closing, will
        be
        for the account of Seller or TOPIII, and all items of income and expense,
        including rents and other charges under the Assigned Contracts, for the period
        on and after the Closing will be for the account of Purchaser, all as determined
        by the accrual method of accounting. If either Party actually receives any
        rents
        or other charges under the Assigned Contracts that are, in whole or in part,
        designated as payments for the period credited to the other Party under this
        Section 5.6(b) “Income and Expenses,” the recipient will, within a reasonable
        period of time, remit such amounts to the other Party.
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 (c)  Proration
        Method .
        For
        purposes of calculating prorations, including the prorations described in
        the
        other subsections of this Section 5.6 “Taxes, Prorations and Closing Costs,”
Purchaser will be deemed to own the Assets, and, therefore, entitled to the
        income therefrom and responsible for the expenses thereof as of 10:00:01
        a.m.
        EST on the Closing Date. All prorations will be made on the basis of the
        actual
        number of days of the month which will have elapsed as of the Closing Date
        and
        based upon a three hundred sixty-five day year. The amount of the prorations
        will be subject to adjustment in cash after the Closing, as and when complete
        and accurate information becomes available, and the Parties agree to cooperate
        and use their good faith efforts to make such adjustments.
  (d)  Governmental
        Fees .
        Any
        fees imposed by any Governmental Authority related to or arising from operations
        of the Assets (including fees relating to air emissions pursuant to any Permit)
        will be prorated between Purchaser and Seller and TOPIII on the following
        basis:
        Seller and TOPIII are responsible for the portion of such fees relating to
        the
        period up to the Closing Date; and Purchaser is responsible for the portion
        of
        such fees relating to the period on and after the Closing Date. All fees
        will be
        prorated on the assumption that an equal amount of fees applies to each day
        of
        the license period, regardless of how or when any installment payments are
        billed or made. Notwithstanding the foregoing, Purchaser will bear all fees
        which arise out of a change in ownership of the Assets, including the transfer
        of the governmental permits, licenses, Orders, variances, approvals and
        applications described in Schedule 2.1(d) “Permits,” and all fees and expenses
        (including expenses related to or arising from the preparation of a renewal
        application, such as environmental consultants’ fees) associated with a renewal
        of a license or permit where the expiration date occurs after the Closing
        Date.
  (e)  Purchaser’s
        Closing Costs .
        Purchaser will pay all costs and fees of (i) Purchaser’s Due Diligence
        Inspections and Reviews, (ii) all costs of obtaining Purchaser’s Required
        Consents, (iii) any Person that is entitled to a brokerage commission, finder’s
        fee or other like payment by reason of Purchaser’s or Purchaser’s Parent’s
        actions, (iv) document recordation in connection with the Closing, and (v)
        Purchaser and Purchaser’s Parent to negotiate and execute this Agreement and the
        Related Agreements.
  (f)  Seller’s
        and TOPIII’s Closing Costs .
        Seller
        will pay: (i) all fees payable to Investment Banker in connection with this
        transaction or any other Person that is entitled to a brokerage commission,
        finder’s fee or other like payment by reason of Seller’s or TOPIII’s actions,
        (ii) all costs of obtaining the approvals described in Section 5.3(a), (iii)
        all
        costs incurred in obtaining Seller’s Required Consents and TOPIII’s Required
        Consents, (iv) the cost of the Title Policies and any endorsements to the
        Title
        Policies reasonably requested by Purchaser, (v) the cost of obtaining any
        new
        surveys or updates to existing surveys, and (vi) the cost of all UCC, lien,
        litigation, judgment or similar searches relating to the Assets, except to
        the
        extent Seller has already paid for said searches in connection with the issuance
        of the Title Policies, and (vii) all fees of Seller or TOPIII to negotiate
        and
        execute this Agreement and the Related Agreements.
  5.7  No
        Recourse .
        To the
        extent the transfer, conveyance, assignment and delivery of Assets to Purchaser
        as provided in this Agreement is accomplished by deeds, assignments,
        sublicenses, subleases, subcontracts or other instruments of transfer and
        conveyance, whether executed at the Closing or thereafter, these instruments
        are
        made without representation or warranty by, or recourse against, the
        transferring or conveying Party except as expressly provided in this Agreement,
        any Related Agreement or any deed, assignment or other instrument of transfer
        and conveyance.
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 5.8  Risk
        of Loss .
  (a)  From
        the
        Effective Date through 10:00 a.m. EST on the Closing Date, all risk of loss
        (including, without limitation, risk of an eminent domain taking or
        condemnation), or Casualty to the Facility or any of the Assets shall be
        borne
        by Seller and/or TOPIII.
  (b)  If,
        after
        the Effective Date but prior to 10:00 a.m. EST on the Closing Date, all or
        any
        portion of the Assets (i) is taken by eminent domain or condemnation or is
        the
        subject of a pending or threatened taking or condemnation of which Seller
        or
        TOPIII becomes aware and which has not been consummated, or (ii) has suffered
        a
        Casualty, Seller shall notify Purchaser promptly in writing of such
        fact:
  (1)  In
        the
        case of a Casualty, Purchaser and Seller shall negotiate in good faith for
        either a fair and equitable adjustment to the Purchase Price or for Seller’s
        restoration (at Seller’s sole expense) of the Assets to the same quality and
        condition such Assets were in prior to the Casualty; if Purchaser and Seller
        agree to restoration of the Assets in the event of a Casualty, Purchaser
        shall
        have the right to observe, inspect and approve the repairs necessitated by
        such
        Casualty. If no negotiated settlement is reached within thirty (30) days
        after
        Seller has notified Purchaser of such Casualty, Purchaser or Seller may
        terminate this Agreement pursuant to Section 9.14.
  (2)  In
        the
        case of an eminent domain taking or condemnation involving the Assets, Purchaser
        or Seller may terminate this Agreement pursuant to Section 9.14(a)(5) or
        Section
        9.14(a)(9).
  5.9  Conduct
        of Business Relating to the Assets .
        From
        the Effective Date through the Closing Date, except as described in Schedule
        5.9
“Conduct of Business Not in the Ordinary Course,” or as expressly contemplated
        by this Agreement or to the extent Purchaser otherwise consents in writing,
        Seller and TOPIII (a) will operate and maintain the Facility and the Assets
        (including, without limitation, maintaining adequate levels of spare parts)
        in
        the ordinary course of business consistent with the past practices of Seller
        in
        the eighteen months immediately preceding the Effective Date to the extent
        such
        past practices are no less stringent than those practices required by Prudent
        Utility Practices and otherwise in accordance with Prudent Utility Practices,
        (b) shall use all Commercially Reasonable Efforts to preserve intact the
        Assets,
        and endeavor to preserve the goodwill and relationships with customers,
        suppliers and others having business dealings with it, (c) shall maintain
        the
        insurance coverage described in Section 3.18, and (d) shall comply with all
        applicable laws relating to the Assets, including without limitation, all
        Environmental Laws then in effect, except where the failure to so comply
        would
        not reasonably be expected to result in a Material Adverse Effect. Without
        limiting the generality of the foregoing, and, except as contemplated in
        this
        Agreement or as described in Schedule 5.9 “Conduct of Business Not in the
        Ordinary Course,” or as required under applicable law or by any Governmental
        Authority, prior to the Closing Date, without the prior written consent of
        Purchaser, Seller and TOPIII shall not with respect to the Assets:
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 (i)  Make
        any
        material change in the levels of Inventories customarily maintained by Seller
        with respect to the Assets, other than changes which are consistent with
        Prudent
        Utility Practices;
  (ii)  Sell,
        lease (as lessor), sublease (as sublessor), enter into any license (as licensor)
        or use or occupancy agreement (as grantor), encumber with any Liens (other
        than
        with Permitted Liens), pledge, transfer or otherwise dispose of, any Assets
        individually or in the aggregate (except for Assets used, consumed or replaced
        in the ordinary course of business consistent with past practices of Seller
        during the eighteen (18) months immediately preceding the Effective Date,
        to the
        extent such past practices are no less stringent than those practices required
        by Prudent Utility Practices and otherwise in accordance with Prudent Utility
        Practices);
  (iii)  Modify,
        amend or voluntarily terminate prior to the expiration date any of the Assigned
        Contracts or any of the Permits in any material respect, other than (a) in
        the
        ordinary course of business, to the extent consistent with the past practices
        of
        Seller in the eighteen (18) months immediately preceding the Effective Date,
        to
        the extent such past practices are no less stringent than those practices
        required by Prudent Utility Practices and otherwise in accordance with Prudent
        Utility Practices, (b) with cause, to the extent consistent with past
        practices of Seller to the extent such past practices are no less stringent
        than
        those practices required by Prudent Utility Practices and otherwise in
        accordance with Prudent Utility Practices, or (c) as may be required in
        connection with transferring Seller’s or TOPIII’s, as the case may be, rights or
        obligations thereunder to Purchaser pursuant to this Agreement and the Related
        Agreements;
  (iv)  Except
        for commitments under the Fuel Agreement or as otherwise permitted by the
        Fuel
        Agreement, enter into any commitment for the purchase, sale, or transportation
        of coal, lignite or other alternative fuel;
  (v)  Sell,
        lease or otherwise dispose of Emission Allowances or Emission Reduction Credits,
        except to the extent necessary to operate the Assets in accordance with this
        Section;
  (vi)  Except
        as
        otherwise provided herein, enter into any contract, agreement, commitment
        or
        arrangement relating to the Assets that individually exceeds Fifty Thousand
        Dollars ($50,000) or in the aggregate exceeds One Hundred Thousand Dollars
        ($100,000) unless it is terminable by Seller or TOPIII, as applicable, (or,
        after the Closing, by Purchaser) without penalty or premium upon no more
        than
        thirty (30) days’ notice;
  (vii)  (a)
        hire
        at, or transfer to the Facility, any new employees prior to the Closing,
        other
        than to fill vacancies in existing positions in the reasonable discretion
        of
        Seller, (b) voluntarily transfer any of Seller’s Employees from the Facility or
        terminate any of Seller’s Employees other than “for cause” (which “cause” shall
        be in Seller’s reasonable discretion); (c) materially increase
        salaries
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 or
        wages
        of Seller’s Employees prior to the Closing, (d) take any action prior to
        the Closing to effect a material change in any employment agreements with
        Seller’s Employees, or (e) take any action prior to the Closing to materially
        increase the aggregate benefits payable to the Seller’s Employees;
  (viii)  Make
        any
        Capital Expenditures which exceed Fifty Thousand Dollars ($50,000) in any
        instance or One Hundred Thousand Dollars ($100,000) in the
        aggregate;
  (ix)  Use
        any
        spare parts listed on Schedule 2.1(g) “Inventories” except in the ordinary
        course for the operation and/or maintenance of the Facility in accordance
        with
        Prudent Utility Practice or move such spare parts to any off-Site location;
        or
  (x)  Except
        as
        otherwise provided herein, enter into any written or oral contract, agreement,
        commitment or arrangement with respect to any of the proscribed transactions
        set
        forth in the foregoing paragraphs (i) through (ix).
  5.10  Access
        to Information .
        Between
        the Effective Date and the Closing Date, Seller and TOPIII will, at reasonable
        times and upon reasonable notice: (i) give Purchaser and its representatives
        reasonable access to their respective managerial personnel and to all Books
        and
        Records, plans, equipment, offices and other facilities and properties
        constituting the Assets; (ii) furnish Purchaser with such financial and
        operating data and other information with respect to the Assets as Purchaser
        may
        from time to time reasonably request, and permit Purchaser to make such
        reasonable inspections thereof as Purchaser may request; (iii) furnish Purchaser
        at its request a copy of each material report, schedule or other document
        filed
        by Seller, TOPIII or their respective Affiliates with respect to the Assets
        with
        the SEC, FERC, PUC or any other Governmental Authority; and (iv) furnish
        Purchaser with all such other information as shall be reasonably necessary
        to
        enable Purchaser to verify the accuracy of the representations and warranties
        of
        Seller or TOPIII contained in this Agreement and the Related Agreements;
        provided, however, that (A) any such inspection and investigations shall
        be
        conducted in such a manner as not to interfere unreasonably with the operation
        of the Facility or the Assets, (B) Seller and TOPIII shall not be required
        to
        take any action which would constitute a waiver of the attorney-client
        privilege; and (C) Seller and TOPIII need not supply Purchaser with any
        information which Seller is under a legal or contractual obligation not to
        supply.
  5.11  Public
        Statements .
        Subject
        to the requirements imposed by any applicable law or any Governmental Authority
        or stock exchange, prior to the Closing Date, no press release or other public
        announcement or public statement or comment in response to any inquiry relating
        to the transactions contemplated by this Agreement shall be issued or made
        by
        any Party without three (3) Business Days’ advance notice to the other Parties.
        Where practicable, the Parties agree to cooperate in preparing such
        announcements.
  5.12  Expenses .
        Except
        to the extent specifically provided herein, whether or not the transactions
        contemplated hereby are consummated, all costs and expenses incurred in
        connection with this Agreement and the transactions contemplated hereby shall
        be
        borne by the Party incurring such costs and expenses. Purchaser shall be
        responsible for the costs and
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 expenses
        of its independent consultant(s) performing any load following tests and
        analyses (whether conducted prior to or after the Effective Date) regarding
        the
        Facility (the “Load Testing”) and Seller and/or TOPIII shall be responsible for
        costs and expenses (including fuel costs) in connection with operation of
        the
        Facility during such Load Testing.
  5.13  [Reserved].
  5.14  Spare
        Parts .
        In the
        event that on the Closing Date, the spare parts listed on Schedule 2.1(g)
        “Inventories” have not been used in the operation and/or maintenance of the
        Facility prior to the Closing Date but are not accounted for, Seller shall
        at
        its sole cost and expense, replace such spare parts promptly after the Closing
        Date with spare parts of the same value, quality and warranty as determined
        by
        Purchaser in its reasonable discretion. Seller’s payment for such replacement
        spare parts shall be offset, as applicable, against any amount payable by
        Seller
        to Purchaser under Section 2.7(b).
  5.15  Further
        Assurances .
        Subject
        to the terms and conditions of this Agreement, each of the Parties hereto
        shall
        use its best efforts to take, or cause to be taken, all actions, and to do,
        or
        cause to be done, all things necessary, proper or advisable under applicable
        laws and regulations to consummate and make effective the purchase and sale
        of
        the Assets pursuant to this Agreement and the assumption of the Assumed
        Liabilities, including without limitation using its Commercially Reasonable
        Efforts to ensure satisfaction of the conditions precedent to each Party’s
        obligations hereunder, including obtaining all necessary consents, approvals,
        and authorizations of third parties and Governmental Authorities required
        to be
        obtained in order to consummate the transactions hereunder, and to effectuate
        a
        transfer of the transferable Permits to Purchaser.
  5.16  Post-Closing
        - Information and Records .
  (a)  Each
        Party agrees that, from and after the Closing Date, it will, promptly following
        the written request of the other Party, provide such information (other than
        privileged and/or attorney work product documents or information) and
        administrative support as will be reasonably requested by the other Party
        to
        enable the requesting Party to comply with its obligations with respect to
        any
        Excluded Liability and obligations with respect to any Governmental Authority,
        including without limitation, FERC, PUC and New Mexico Public Regulation
        Commission or its obligations with respect to the issuance of Forms W-2 and
        1099, and other tax reports, reports and notices relating to pension, profit
        sharing, health and other plans, income tax returns, preparation of financial
        statements and completion of the requesting Party’s audit for the two fiscal
        years ended December 31 following the Closing Date, and other similar
        matters.
  (b)  (1) For
        a
        period of seven (7) years after the Closing Date (or, if requested in writing
        by
        Seller or TOPIII within seven (7) years after the Closing Date, until the
        closing of the examination of Seller’s, TOPIII’s, Seller’s Parent’s and its
        subsidiaries’ federal income tax returns for all periods prior to and including
        the Closing, if later), Purchaser will not dispose of any books, records,
        documents or information relating to any of the Assets delivered to it by
        Seller
        or TOPIII without first giving notice to Seller and TOPIII thereof and
        permitting Seller and TOPIII to retain or copy such books and records as
        Seller
        or TOPIII may select (other than
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 privileged
        and/or attorney work product documents and information). During such period,
        Purchaser will permit Seller and TOPIII to examine and make copies, at Seller’s
        and TOPIII’s expense, of such books, records, documents and information for any
        reasonable purpose, including anything reasonably required in connection
        with
        any Excluded Liability, litigation now pending or hereafter commenced against
        Seller or TOPIII by any third party or Governmental Authority or the preparation
        of income or other Tax Returns.
  (2)  Purchaser
        will permit Seller and TOPIII to examine and make copies, at Seller’s and
        TOPIII’s expense, of such books, records, documents and information relating to
        any of the Assets delivered to it by Seller or TOPIII for any reasonable
        purpose, including anything reasonably required in connection with any Excluded
        Liability, any litigation now pending or hereafter commenced against Seller
        or
        TOPIII by any third party or Governmental Authority. Seller and TOPIII will
        provide reasonable notice to Purchaser of their need to access such books,
        records, documents or other information and will submit a request in writing
        that (A) describes the books or records requested, (B) states the purpose
        for
        which the book or record is necessary, (C) certifies that Seller and TOPIII
        will
        only use the book or record for the purpose stated (and will restrict access
        to
        such book and record to such persons within its organization or attorneys
        on a
        need-to-know basis) and that such use is reasonably related to the stated
        purpose and (D) commits Seller and TOPIII to return such book or record (and/or
        destroy all copies of such book or record) when the use is completed or purpose
        has been achieved, unless Seller or TOPIII is required by law, statute,
        regulation or Order, to retain such documents for a statutory period of time
        before destruction is permitted. Seller and TOPIII agree such books, records,
        documents or other information shall be deemed to constitute Confidential
        Information.
  (3)  If
        privileged and/or attorney work product documents or information, including
        communications between Seller and its counsel or TOPIII and its counsel,
        are
        inadvertently disclosed to Purchaser in the books, records, documents or
        other
        information located at the Site or otherwise delivered to Purchaser, or if
        any
        other document or information constituting Excluded Assets remains on the
        Site
        after the Closing, Purchaser agrees (A) such disclosure is inadvertent, (B)
        not
        to assert that such disclosure constitutes a waiver, in whole or in part,
        of any
        privilege or work product, (C) such information will constitute Confidential
        Information, and (D) it will promptly return to Seller or TOPIII, as the
        case
        may be, all copies of such information in the possession of Purchaser to
        the
        extent Purchaser obtains Knowledge of such inadvertent disclosure.
  (4)  If
        privileged and/or attorney work product documents or information, including
        communications between Purchaser and its counsel, are inadvertently disclosed
        to
        Seller or TOPIII in the books, records, documents or other information delivered
        to Seller or TOPIII, Seller and TOPIII agree (A) such disclosure is inadvertent,
        (B) not to assert that such disclosure constitutes a waiver, in whole or
        in
        part, of any privilege or work product, (C) such information will constitute
        Confidential Information, and (D) it will promptly return to Purchaser all
        copies of such information in the possession of Seller or TOPIII to the extent
        Seller or TOPIII, as the case may be, obtain Knowledge of such inadvertent
        disclosure.
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 (c)  Each
        Party will make available to the other Party, on a reasonable basis and as
        requested from time to time by the other Party after Closing, those employees
        of
        such Party with Knowledge of or relevant to the matters described in this
        Section 5.16 “Post-Closing - Information and Records” for the purpose of
        consultation in connection with such matters.
  5.17  Employees .
  (a)  Seller
        shall terminate, effective as of the Closing Date, the employment of all
        employees listed on Schedule 3.19(a) “Seller’s Employees,” and shall pay to
        Seller’s Employees all wages, salaries, commissions (if any) and bonuses which
        are due to them, including, without limitation, all unused Paid Time Off
        as
        defined under Seller’s policies accrued up to the Closing Date. Purchaser agrees
        to make an offer of employment to each of Seller’s Employees on or before the
        Closing Date; provided, however, that any offer of employment to, and any
        employment by Purchaser or any of its Affiliates of, a Seller’s Employee are
        subject to all of Purchaser’s and its Affiliates’, as applicable, standard
        employment requirements. Each offer of employment to a Seller’s Employee shall
        include base pay no less than the base pay payable to such Seller’s Employee as
        set forth on Schedule 3.19(a), and such employment shall have a principal
        place
        of work that is at the Facility. Each of Seller’s Employees who accepts such
        offer of employment, commences employment with Purchaser and satisfactorily
        completes all of Purchaser’s standard employment requirements shall be
        hereinafter referred to as a “Transferred Employee.” Unless otherwise agreed
        between Purchaser and a Transferred Employee, offers of employment shall
        be on
        an at-will basis.
  (b)  Purchaser
        shall (i) provide each Transferred Employee, for the one-year period ending
        on
        the first anniversary of the Closing Date, a rate of base pay that is no
        less
        than the rate of base pay set forth on Schedule 3.19(a) with respect to such
        Transferred Employee and (ii) provide such Transferred Employees (as a group)
        during their employment with Purchaser with employee benefit plans, programs
        and
        policies (other than equity-based plans, programs or policies) that are
        substantially similar in the aggregate to those employee benefit plans, programs
        and policies that are maintained by Purchaser or its Affiliates from time
        to
        time for the benefit of similarly situated employees of Purchaser or its
        Affiliates (any such employee benefit plans, programs or policies of Purchaser
        or its Affiliates in which Transferred Employees become eligible to participate
        after the Closing Date shall be referred to hereinafter as, the “Purchaser
        Plans”). Notwithstanding the foregoing, Purchaser shall not be required to
        provide the Transferred Employees with any benefits under any defined benefit
        pension plan or retiree medical plan of Purchaser that is frozen as of the
        Closing Date, unless otherwise required by law or the terms of any such plan.
        If
        there are no similarly situated employees of Purchaser or its Affiliates,
        Purchaser shall provide such Transferred Employees (as a group) with employee
        benefit plans, programs and policies that are substantially similar in the
        aggregate to those of Seller, in which case Seller hereby agrees to provide
        Purchaser, upon written request, with any information reasonably required
        by
        Purchaser in order for it to fulfill such obligation. Neither Purchaser nor
        Purchaser Plans shall receive assets from, nor be required to assume any
        liabilities of, the Benefit Plans.
  (c)  With
        respect to Purchaser Plans, except to the extent otherwise required by
        applicable law, Purchaser shall use commercially reasonable efforts to (i)
        with
        respect to each such Purchaser Plan that is a medical or health plan, waive,
        or
        cause the waiver of, any
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 exclusions
        for pre-existing conditions and waiting periods for each Transferred Employee
        and his/her dependents to the extent that such pre-existing condition exclusions
        and waiting periods were previously satisfied by such Transferred Employee
        or
        his/her dependents under the analogous Benefit Plan in which such Transferred
        Employee participated immediately prior to the Closing Date, (ii) with respect
        to each such Purchaser Plan that is a medical or health plan, provide each
        Transferred Employee with credit for any deductibles and out-of-pocket expenses
        paid or incurred by such Transferred Employee prior to his or her transfer
        to
        the Purchaser Plan (to the same extent such credit was given under the analogous
        Benefit Plan in which such Transferred Employee participated immediately
        prior
        to the Closing Date) in satisfying any applicable deductible or out-of-pocket
        requirements under such Purchaser Plan for the plan year that includes such
        transfer and (iii) recognize service of the Transferred Employees credited
        by
        Seller and/or Sempra for purposes of eligibility to participate and vesting
        in
        any Purchaser Plan in which the Transferred Employees’ are eligible to
        participate after the Closing Date; provided, however that in no event shall
        the
        Transferred Employees be entitled to any credit to the extent that it would
        result in a duplication of benefits with respect to the same period of
        service.
  (d)  Purchaser
        shall provide severance benefits in an amount no less than that described
        in
        Schedule 5.17(d) “Minimum Severance Benefit” to any Transferred Employee who,
        during the period beginning on the Closing Date and ending on the date which
        is
        twelve (12) months after the Closing Date: (i) is terminated without cause;
        or
        (ii) elects to terminate his employment with Purchaser within seven (7) days
        after Purchaser notifies such Transferred Employee of Purchaser’s intent to (1)
        reduce such Transferred Employee’s rate of base pay or (2) assign such
        Transferred Employee to a principal place of work that is different than
        the
        Facility.
  (e)  No
        Seller’s Employee who declines employment with Purchaser shall receive a greater
        severance benefit, if any, from Seller than said employee would have received
        had the offer of employment been accepted.
  (f)  In
        accordance with the elections made pursuant to Section 401(a)(31) of the
        Code by
        Transferred Employees and to the extent permissible under applicable law,
        Seller
        shall facilitate the transfer of assets held in the respective accounts of
        such
        Transferred Employees from the Twin Oaks Savings Plan to a plan or plans
        designated by Purchaser. Purchaser agrees to accept intact rollovers of the
        cash
        and loans associated with such Transferred Employees’ accounts.
  (g)  After
        the
        Effective Date and prior to the Closing Date, Purchaser shall have the right
        to
        meet with Seller’s Employees from time to time to discuss post-Closing
        employment matters; provided, however, Purchaser shall notify Seller at least
        two (2) Business Days prior to the date on which the meeting is proposed
        to be
        held, and Seller shall have the right to have one or more Seller’s
        Representatives (as defined below) attend such meetings. If any written
        materials are to be provided or used during a meeting, Purchaser shall provide
        copies of such written materials to Seller at least two (2) Business Days
        prior
        to the meeting. For purposes of this paragraph, “Seller’s Representatives” shall
        mean one or more representatives of Seller but shall not include any of the
        Seller’s Employees. After the Effective Date and prior to the Closing Date,
        Seller covenants that it shall (i) use Commercially Reasonable Efforts to
        retain
        Seller’s Employees, (ii) allow Purchaser reasonable access to Seller’s Employees
        to discuss post-Closing
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 employment
        with Purchaser and other employment-related matters, provided that notice
        is
        given pursuant to this paragraph, and meetings are conducted in a group and
        not
        on a one-to-one basis and (iii) not make or attempt to make, directly or
        indirectly, alternative employment offers to Seller’s Employees or otherwise
        solicit or attempt to solicit Seller’s Employees for employment after the
        Closing Date other than with Purchaser.
  5.18  Review
        of Accounts Payable .
        If
        Purchaser is responsible for paying an account payable relating to the Assets
        which becomes due and payable after the Closing but relates to a pre-Closing
        Date period, Seller or TOPIII, as the case may be, shall provide copies of
        such
        accounts payable to Purchaser.
  5.19  Advice
        of Changes .
        Prior
        to the Closing, each Party will advise the other in writing with respect
        to any
        matter arising after the Effective Date of which the applicable Party obtains
        Knowledge and which, if existing or occurring at the Effective Date, would
        have
        been required to be set forth in any of the Schedules.
  5.20  Purchaser’s
        Parent Undertakings with Respect to Assignments .
        In
        connection with the J.Aron PPA and the PPA Assignment related thereto,
        Purchaser’s Parent shall provide a guaranty of the liabilities and obligations
        of Purchaser under the J.Aron PPA in form substantially similar to the Sempra
        Energy guaranty attached hereto as Exhibit L, and such other credit support
        requested by J.Aron in connection with the assignment of the J.Aron PPA to
        Purchaser. In connection with the [*] PPA and the PPA Assignment related
        thereto, Purchaser’s Parent shall provide the credit support required by the [*]
        PPA and any related agreements and such other credit support requested by
        [*] in
        accordance with such agreements in connection with the assignment of the
        [*] PPA
        to Purchaser. In connection with the Fuel Agreement and the Fuel Agreement
        Assignment, Purchaser’s Parent shall provide a guaranty of the liabilities and
        obligations of Purchaser under the Fuel Agreement, if required, in form
        substantially similar to the Sempra Energy guaranty attached hereto as Exhibit
        M .
  5.21  Purchaser’s
        Parent Guaranty .
  (a)  Purchaser’s
        Parent hereby irrevocably, absolutely and unconditionally guarantees to Seller,
        TOPIII and their respective successors, endorsees, transferees and assigns
        the
        full, complete, prompt and faithful payment and performance by Purchaser
        (and
        any permitted designee of Purchaser pursuant to Section 2.1) when due of
        all of
        the liabilities and obligations of Purchaser (and any permitted designee
        of
        Purchaser pursuant to Section 2.1) under any or all of this Agreement and
        the
        Related Agreements to which Purchaser (and any permitted designee of Purchaser
        pursuant to Section 2.1) is or becomes a party, including without limitation,
        Purchaser’s (and any permitted designee of Purchaser pursuant to Section 2.1)
        indemnification obligations under Article 8 (collectively, the “Purchaser’s
        Guaranteed Obligations”). Purchaser’s Parent hereby irrevocably and
        unconditionally covenants and agrees that it is liable for the Purchaser’s
        Guaranteed Obligations as primary obligor, and that this is a guaranty of
        performance and payment when due and not of collectibility. Purchaser’s Parent
        agrees that a separate action or actions may be brought and prosecuted against
        Purchaser’s Parent for any of the Purchaser’s Guaranteed Obligations not
        otherwise performed by Purchaser (or any permitted designee of Purchaser
        pursuant to Section 2.1), whether action is brought against Purchaser (and
        any
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 permitted
        designee of Purchaser pursuant to Section 2.1) or whether Purchaser (and
        any
        permitted designee of Purchaser pursuant to Section 2.1) is joined in any
        such
        action or actions. Purchaser’s Parent hereby waives any right to require Seller
        or TOPIII to first proceed against Purchaser (and any permitted designee
        of
        Purchaser pursuant to Section 2.1), except that prior to making any demand
        or
        claim against Purchaser’s Parent under this Section 5.21, Seller and/or TOPIII
        shall have made written demand upon Purchaser (and any permitted designee
        of
        Purchaser pursuant to Section 2.1) to satisfy the Purchaser’s Guaranteed
        Obligations in question and Purchaser (and any permitted designee of Purchaser
        pursuant to Section 2.1) shall have failed to satisfy such demand within
        five
        (5) Business Days.
  (b)  After
        the
        Closing Date, the obligations of Purchaser’s Parent in Section 5.21(a) shall not
        exceed a cumulative total of Twenty-Five Million Dollars ($25,000,000) to
        the
        extent such obligations relate exclusively to Purchaser’s (and any permitted
        designee of Purchaser pursuant to Section 2.1) obligations under Section
        8.1(a)(2).
  (c)  The
        obligations of Purchaser’s Parent in Section 5.21(a) shall expire on the date
        which is two (2) years after the Closing Date, except that the obligations
        of
        Purchaser’s Parent in respect of any unsatisfied obligations of Purchaser (and
        any permitted designee of Purchaser pursuant to Section 2.1) arising under
        Section 2.11 shall survive until the earlier of (i) Purchaser’s (or any
        permitted designee of Purchaser pursuant to Section 2.1) payment of the fees
        provided in Section 2.11, or (ii) the date which is two (2) years after the
        issuance of the permit described in Section 2.11; provided that, in the event
        that after the expiration of the obligations of Purchaser’s Parent under Section
        5.21(a), Purchaser (and any permitted designee of Purchaser pursuant to Section
        2.1) transfers or otherwise disposes of all or substantially all of its right,
        title and/or interest in the Assets to a third party and such third party
        purchaser does not assume all of the obligations of Purchaser hereunder in
        a
        manner reasonably acceptable to Seller, the obligations of Purchaser’s Parent
        under Section 5.21(a) shall automatically be reinstated and effective against
        Purchaser’s Parent and Purchaser’s Parent shall be liable to Seller and/or
        TOPIII for such obligations of Purchaser’s Parent under Section 5.21(a). Notwithstanding
        any provision of this Section 5.21(c), expiration of the obligations of
        Purchaser’s Parent shall not bar any claim or demand upon Purchaser’s Parent in
        respect of any Purchaser’s Guaranteed Obligation so long as such claim or demand
        is initiated within one (1) year of such expiration **.**
  5.22  Seller’s
        Parent Guaranty .
  (a)  Seller’s
        Parent hereby irrevocably, absolutely and unconditionally guarantees to
        Purchaser and its respective successors, endorsees, transferees and assigns
        the
        full, complete, prompt and faithful payment and performance by Seller and
        TOPIII
        when due of all of the liabilities and obligations of Seller and TOPIII under
        any or all of this Agreement and the Related Agreements to which Seller and/or
        TOPIII is or becomes a party, including without limitation, Seller’s and
        TOPIII’s indemnification obligations under Article 8 (collectively, the
“Seller’s Guaranteed Obligations”). Seller’s Parent hereby irrevocably and
        unconditionally covenants and agrees that it is liable for the Seller’s
        Guaranteed Obligations as primary obligor, and that this is a guaranty of
        performance and payment when due and not of collectibility. Seller’s Parent
        agrees that a separate action or actions may be brought and prosecuted against
        Seller’s Parent for any of the Seller’s Guaranteed Obligations not otherwise
        performed by Seller and/or TOPIII, whether action is brought against Seller
        and/or TOPIII or whether Seller and/or TOPIII is joined in any such action
        or
        actions. Seller’s Parent hereby waives any right to require
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        to first proceed against Seller and/or TOPIII, except that prior to making
        any
        demand or claim against Seller’s Parent under this Section 5.22, Purchaser shall
        have made written demand upon Seller and/or TOPIII to satisfy the Seller’s
        Guaranteed Obligations in question and Seller and/or TOPIII shall have failed
        to
        satisfy such demand within five (5) Business Days.
  (b)  After
        the
        Closing Date, the obligations of Seller’s Parent in Section 5.22(a) shall not
        exceed a cumulative total of Twenty-Five Million Dollars ($25,000,000) to
        the
        extent such obligations relate exclusively to Seller’s and TOPIII’s obligations
        under Section 8.1(b)(2).
  (c)  The
        obligations of Seller’s Parent in Section 5.22(a) shall expire on the date which
        is two (2) years after the Closing Date; provided that such obligations of
        Seller’s Parent in Section 5.22(a) shall not expire to the extent they relate
        exclusively to Section 8.1(b)(3) to the extent there are any liabilities
        to be
        treated as Excluded Liabilities pursuant to Section 5.24
  5.23  Transition
        Services Agreement .
        Seller
        agrees to provide the services described in Exhibit K, subject to terms and
        conditions to be mutually agreed by the Parties. The Parties shall use
        Commercially Reasonable Efforts to enter into a Transition Services Agreement
        within thirty (30) Business Days of the Effective Date, which shall become
        effective on the Closing Date.
  5.24  Notice
        of Potential Excluded Liabilities .
        Purchaser shall give Seller prompt written notice of any matter that it believes
        Seller shall have the option to classify as an Excluded Liability pursuant
        to
        the definition of Material Adverse Effect and/or Section 6.14, stating the
        nature of such matter in reasonable details and indicating the basis for
        such
        assertion and the estimated amount of such liability (and how it was
        determined), if practicable, but in any event such notice shall not be given
        later than five (5) Business Days after Purchaser becomes aware of such matter,
        and Seller shall have a period of twenty (20) Business Days within which
        to
        respond to such notice and agree to classify such matter as an Excluded
        Liability pursuant to the definition of Material Adverse Effect and/or Section
        6.14. If Seller does not respond within such twenty (20) Business Day period,
        Purchaser shall issue a second notice to Seller and Seller shall have a period
        of ten (10) Business Days within which to respond to such second notice.
        If
        Seller does not respond to the second notice within such ten (10) Business
        Day
        period, then Seller shall not be deemed to have classified such matter as
        an
        Excluded Liability.
  ARTICLE
        VI
  CONDITIONS
        PRECEDENT TO OBLIGATIONS OF PURCHASER
  The
        obligations of Purchaser under this Agreement to complete the purchase of
        the
        Assets and assume the Assumed Liabilities are subject to the satisfaction
        or
        waiver by Purchaser, on or prior to the Closing Date, of each of the following
        conditions precedent:
  6.1  No
        Injunctions .
        No
        preliminary or permanent injunction or other Order or decree by any federal
        or
        state court or Governmental Authority which prevents the consummation of
        the
        sale of the Assets contemplated herein shall have been issued and remain
        in
        effect (each Party agreeing to use its reasonable best efforts to have any
        such
        injunction, Order or decree lifted) and no statute, rule or regulation shall
        have been enacted by any state or federal government or Governmental Authority
        which prohibits the consummation of the sale of the Assets.
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 6.2  True
        Representations and Warranties .
        The
        representations and warranties of Seller set forth in this Agreement shall
        be
        true and correct in all material respects as of the Closing Date as though
        made
        at and as of the Closing Date (except where such representation and warranty
        speaks by its terms as of a different date, in which case it shall be true
        and
        correct as of such date), except to the extent that, individually or in the
        aggregate, such inaccuracies have not had, and are not reasonably likely
        to
        have, a Material Adverse Effect.
  6.3  Compliance
        with Provisions .
        Seller
        and TOPIII have performed or complied in all material respects with all
        covenants, agreements and conditions contained in this Agreement and the
        Related
        Agreements on their respective parts required to be performed or complied
        with
        at or prior to the Closing Date.
  6.4  Seller’s
        and TOPIII’s Receipt of Approvals of Governmental Authorities .
        The
        condition set forth in Section 7.4 “Seller’s and TOPIII’s Receipt of Approvals
        of Governmental Authorities” has been satisfied or waived by
        Seller.
  6.5  Purchaser’s
        Receipt of Approvals of Governmental Authorities .
        Purchaser has received all Seller’s Required Consents (other than Seller’s
        Required Consents relating to the Fuel Agreement Assignment and the PPA
        Assignment), TOPIII’s Required Consents and Purchaser’s Required Consents in
        form and substance reasonably satisfactory to Purchaser (including no material
        adverse conditions).
  6.6  Officer’s
        Certificates .
        Purchaser shall have received certificates from an authorized officer of
        each of
        Seller and TOPIII, each dated as of the Closing Date, to the effect that
        the
        conditions set forth in Section 6.2 have been satisfied by Seller and
        TOPIII.
  6.7  Legal
        Opinion .
        Purchaser shall have received an opinion from Seller’s and TOPIII’s counsel,
        dated the Closing Date, in form and substance reasonably satisfactory to
        Purchaser.
  6.8  Deliveries .
        Seller
        and TOPIII have delivered, or caused to be delivered, to Purchaser at the
        Closing the documents and payments referenced in Schedule 6.8 “Closing
        Deliveries by Seller and TOPIII.” If an event or circumstance occurs after the
        Effective Date that would require an update to a representation, warranty,
        or of
        any Schedule to this Agreement by Seller or TOPIII, then Seller or TOPIII,
        as
        the case may be, shall have ten (10) Business Days within which to update
        said
        representation, warranty, or Schedule.
  6.9  [ Reserved ].
  6.10  Title
        Insurance .
        Title
        to the Real Property Interests shall have been evidenced by the willingness
        of
        Stewart Title Guaranty Company (the “Title Insurer”) to issue ALTA (1970 Form B)
        owner’s, or lessee’s, as the case may be, extended coverage policies of title
        insurance, or the Texas equivalent (the “Title Policies”), with the general
        survey exception removed, in an amount equal to the Purchase Price showing
        title
        to the Real Property Interests vested in Purchaser, with such endorsements
        as
        were contained in the title policies delivered to Seller pursuant to the
        2002
        Purchase and Sale Agreement (the “Seller’s Title Policies”) and similar in form
        and content to such title policies. Such Title Policies shall show title
        vested
        in Purchaser
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 subject
        only to the matters to which the Seller’s Title Policies were subject and any
        Permitted Liens. The willingness of the Title Insurer to issue the Title
        Policies shall be evidenced either by the issuance thereof on the Closing
        Date
        or by the Title Insurer’s delivery of written commitments or binders, dated as
        of the Closing Date, to issue such Title Policies within a reasonable time
        after
        the Closing Date, subject to actual transfer of the real property in
        question.
  6.11  No
        Material Adverse Effect .
        Between
        the Effective Date and Closing Date, no Material Adverse Effect shall have
        occurred and be continuing.
  6.12  Hart-Scott-Rodino .
        The
        conditions precedent set forth in Section 5.3(d) “Hart-Scott-Rodino” shall have
        been satisfied.
  6.13  No
        Termination .
        No
        Party shall have exercised any termination right such Party is entitled to
        exercise pursuant to Section 9.14 “Termination.”
  6.14  Environmental
        Assessment .
        Purchaser shall have received from Seller a customary Phase I environmental
        assessment of the Site conducted by an independent third party, and such
        assessment shall not identify any ongoing non-compliance with applicable
        Environmental Law or Remediation currently required by applicable Environmental
        Law, in each case (a) arising after the Initial Closing Date, (b) not disclosed
        to Purchaser prior to the Effective Date, and (c) reasonably anticipated
        to
        require costs, other than those that Seller agrees to classify as Excluded
        Liabilities pursuant to Section 5.24, in excess of Twenty-Five Million Dollars
        ($25,000,000).
  6.15  J.Aron
        PPA and Fuel Agreement .
        The
        J.Aron PPA and the Fuel Agreement are in full force and effect and are valid,
        binding and enforceable against Seller immediately prior to the Closing and
        Purchaser shall have received Seller’s Required Consent related to the PPA
        Assignment with respect to the J.Aron PPA and the Fuel Agreement Assignment;
        provided that this condition precedent shall not apply unless Purchaser shall
        have satisfied its obligations with respect to credit support pursuant to
        Section 5.3(e)(1) and Purchaser’s Parent has satisfied its obligations with
        respect to guaranties and credit support pursuant to Section 5.20.
        Notwithstanding the foregoing, in the event that the Fuel Agreement has been
        terminated as a result of the Disputes, this condition precedent shall not
        apply
        to the Fuel Agreement.
  ARTICLE
        VII
  CONDITIONS
        PRECEDENT TO OBLIGATIONS OF SELLER AND TOPIII
  The
        obligations of Seller and TOPIII under this Agreement to complete the sale
        of
        the Assets and transfer the Assets and Assumed Liabilities to Purchaser are
        subject to the satisfaction or waiver by Seller or TOPIII, on or prior to
        the
        Closing Date, of each of the following conditions precedent:
  7.1  No
        Injunctions .
        No
        preliminary or permanent injunction or other Order or decree by any federal
        or
        state court of Governmental Authority which prevents the consummation of
        the
        sale of the Assets contemplated herein shall have been issued and remain
        in
        effect (each Party agreeing to use its reasonable best efforts to have any
        such
        injunction, Order or decree lifted) and no statute, rule or regulation shall
        have been enacted by any state or federal government or Governmental Authority
        which prohibits the consummation of the sale of the Assets.
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 7.2  Compliance
        with Provisions .
        Purchaser has performed or complied in all material respects with all covenants,
        agreements and conditions contained in this Agreement and the Related Agreements
        on its part required to be performed or complied with at or prior to the
        Closing
        Date.
  7.3  True
        Representations and Warranties .
        The
        representations and warranties of Purchaser as set forth in this Agreement
        shall
        be true and correct in all material respects as of the Closing Date as though
        made at and as of the Closing Date (except where such representation and
        warranty speaks by its terms as of a different date, in which case it shall
        be
        true and correct as of such date), except to the extent that, individually
        or in
        the aggregate, such inaccuracies have not had, and are not reasonably likely
        to
        have, a Material Adverse Effect.
  7.4  Seller’s
        and TOPIII’s Receipt of Approvals of Governmental Authorities .
        Seller
        and TOPIII have received and approved (in their sole discretion) any approval
        required to be obtained from the Governmental Authorities listed on Schedule
        7.4
“Required Governmental Approvals,” as such Schedule may be amended prior to
        Closing, and which approvals are in full force and effect on the Closing
        Date.
  7.5  Purchaser’s
        Receipt of Approvals of Governmental Authorities .
        The
        condition set forth in Section 6.5 “Purchaser’s Receipt of Approvals of
        Governmental Authorities” has been satisfied or waived by Purchaser, and Seller
        and TOPIII have confirmed that the specific consents, approvals, permits
        and
        licenses listed on Schedule 5.3(c) “Purchaser’s Required Consents” have been
        obtained by Purchaser.
  7.6  Officer’s
        Certificates .
        Seller
        and TOPIII shall have received certificates from an authorized officer of
        Purchaser, dated as of the Closing Date, to the effect that the conditions
        set
        forth in Section 7.2 and Section 7.3 have been satisfied by
        Purchaser.
  7.7  No
        Adverse Proceedings .
        No
        court or administrative agency of competent jurisdiction shall have issued
        an
        order or injunction which restrains or prohibits the transactions contemplated
        hereunder.
  7.8  Deliveries .
        Purchaser has delivered, or will cause to be delivered, to Seller and TOPIII
        at
        the Closing, the documents and payments referenced in Schedule 7.8 “Closing
        Deliveries by Purchaser.” If an event or circumstance occurs after the Effective
        Date that would require an update to a representation, warranty, or of any
        Schedule to this Agreement by Purchaser, then Purchaser shall have ten (10)
        Business Days within which to update said representation, warranty, or
        Schedule.
  7.9  Hart-Scott-Rodino .
        The
        conditions precedent set forth in Section 5.3(d) “Hart-Scott-Rodino” shall have
        been satisfied.
  7.10  No
        Termination .
        No
        Party shall have exercised any termination right such Party is entitled to
        exercise pursuant to Section 9.14 “Termination.”
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 7.11  Legal
        Opinion .
        Seller
        and TOPIII shall have received an opinion from Purchaser’s counsel, dated the
        Closing Date, in form and substance reasonably satisfactory to Seller and
        TOPIII.
  7.12  Required
        Consents .
        Purchaser shall have received the Seller’s Required Consents relating to the
        Fuel Agreement Assignment and the PPA Assignment and Seller and any of its
        Affiliates, as applicable, shall have been released from any and all liabilities
        and obligations under or in connection with the Fuel Agreement and the Power
        Agreements. Notwithstanding the foregoing, in the event that the Fuel Agreement
        has been terminated as a result of the Disputes, this condition precedent
        shall
        not apply to the Fuel Agreement.
  7.13  Environmental
        Assessment .
        Seller
        shall have received a customary Phase I environmental assessment of the Site
        conducted by an independent third party, and such assessment shall not identify
        any ongoing non-compliance with applicable Environmental Law or Remediation
        currently required by applicable Environmental Law, in each case (a) arising
        after the Pre-Initial Closing Date, (b) not disclosed to Purchaser prior
        to the
        Effective Date, and (c) reasonably anticipated to require costs, other than
        those that Seller agrees to classify as Excluded Liabilities pursuant to
        Section
        5.24, in excess of Twenty-Five
        Million Dollars ($25,000,000) .
  ARTICLE
        VIII
  INDEMNIFICATION
  8.1  Indemnification .
  (a)  Purchaser
        shall indemnify, defend and hold harmless Seller, TOPIII, their respective
        officers, directors, employees, shareholders, Affiliates and agents (each,
        a
“Seller Indemnitee”) from and against any and all claims, demands, suits,
        losses, liabilities, damages, obligations, payments, costs and expenses
        (including, without limitation, the costs and expenses of any and all actions,
        suits, proceedings, assessments, judgments, settlements and compromises relating
        thereto and reasonable attorneys’ fees and reasonable disbursements in
        connection therewith) (each, an “Indemnifiable Loss”), asserted against or
        suffered by any Seller Indemnitee relating to, resulting from or arising
        out
        of:
  (1)  any
        breach by Purchaser of any covenant or agreement of Purchaser contained in
        this
        Agreement or the representations and warranties contained in Article
        4;
  (2)  any
        untrue representations or warranties of Purchaser in this Agreement or the
        Related Agreements;
  (3)  the
        Assumed Liabilities;
  (4)  any
        loss
        or damages, including Third Party Claims, resulting from or caused by any
        inspection performed by or on behalf of Purchaser of the Assets, whether
        performed before or after the Closing Date; or
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 (5)  any
        Third
        Party Claims against a Seller Indemnitee arising out of or in connection
        with
        Purchaser’s ownership, operation or maintenance of the Facility and other Assets
        prior to the Initial Closing Date or on or after the Closing Date.
  (b)  Seller
        and TOPIII shall defend and hold harmless Purchaser, its officers, directors,
        employees, shareholders, Affiliates and agents (each, a “Purchaser Indemnitee”)
        from and against any and all Indemnifiable Losses, except for the Indemnifiable
        Losses referred to in Sections 8.1(a)(1), 8.1(a)(2), 8.1(a)(3), 8.1(a)(4)
        and
        8.1(a)(5), asserted against or suffered by any Purchaser Indemnitee relating
        to,
        resulting from or arising out of:
  (1)  any
        breach by Seller or TOPIII of any covenant or agreement of Seller or TOPIII
        contained in this Agreement or the representations and warranties contained
        in
        Article 3, to the extent such breach of representation or warranty relates
        to
        events or conditions occurring after the Initial Closing Date and prior to
        the
        Closing Date;
  (2)  any
        untrue representations or warranties of Seller or TOPIII in this Agreement
        or
        the Related Agreements;
  (3)  the
        Excluded Liabilities; and
  (4)  any
        Third
        Party Claims against a Purchaser Indemnitee arising out of or in connection
        with
        Seller’s or TOPIII’s ownership, operation or maintenance of the Excluded Assets
        on or after the Closing Date and of the Assets on or after the Initial Closing
        Date and prior to the Closing Date.
  (c)  Purchaser’s
        Parent shall indemnify, defend and hold harmless all Seller Indemnitees from
        and
        against any and all Indemnifiable Losses asserted against or suffered by
        any
        Seller Indemnitee relating to, resulting from or arising out of:
  (1)  any
        breach by Purchaser’s Parent of any covenant or agreement of Purchaser’s Parent
        contained in this Agreement or the representations or warranties contained
        in
        Article 4; or
  (2)
        any
        untrue representations or warranties of Purchaser’s Parent in this Agreement or
        Related Agreements.
  (d)  Seller’s
        Parent shall indemnify, defend and hold harmless all Purchaser Indemnitees
        from
        and against any and all Indemnifiable Losses asserted against or suffered
        by any
        Purchaser Indemnitee relating to, resulting from or arising out of:
  (1)  any
        breach by Seller’s Parent of any covenant or agreement of Seller’s Parent
        contained in this Agreement or the representations or warranties contained
        in
        Article 3; or
  (2)  any
        untrue representations or warranties of Seller’s Parent in this Agreement or
        Related Agreements.
  (e)  Notwithstanding
        anything to the contrary contained herein:
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 (1)  Any
        Seller Indemnitee or Purchaser Indemnitee entitled to receive indemnification
        under this Agreement (an “Indemnitee”) by a Party hereunder (the “Indemnifying
        Party”) shall use Commercially Reasonable Efforts to mitigate all Indemnifiable
        Losses, including availing itself of any defenses, limitations, rights of
        contribution, claims against Third Parties and other rights at law or equity.
        The Indemnitee’s Commercially Reasonable Efforts shall include the reasonable
        expenditure of money to mitigate or otherwise reduce or eliminate any loss
        or
        expenses for which indemnification would otherwise be due, and, subject to
        Section 8.2, the Indemnifying Party shall reimburse the Indemnitee for the
        Indemnitee’s reasonable expenditures in undertaking the mitigation.
  (2)  Any
        Indemnifiable Loss shall be net of the dollar amount of any insurance or
        other
        proceeds actually receivable by the Indemnitee or any of its Affiliates with
        respect to the Indemnifiable Loss to the extent realized by the Indemnitee.
        Any
        party seeking indemnity hereunder shall use Commercially Reasonable Efforts
        to
        seek coverage (including both costs of defense and indemnity) under applicable
        insurance policies with respect to any such Indemnifiable Loss.
  (3)  An
        Indemnifying Party shall not be obligated to indemnify any Indemnitee under
        Sections 8.1(a)(2) and 8.1(b)(2) until and unless the aggregate amount of
        Indemnifiable Losses equals or exceeds Two Million Five Hundred Thousand
        Dollars
        ($2,500,000), whereupon the Indemnifying Party shall be liable for all
        Indemnifiable Losses excluding the first Two Million Five Hundred Thousand
        Dollars ($2,500,000).
  (4)  The
        respective indemnification obligations of Purchaser and of Seller and TOPIII
        (as
        a group) under Sections 8.1(a)(2) and 8.1(b)(2), respectively, and of
        Purchaser’s Parent and Seller’s Parent under Sections 8.1(c)(2) and 8.1(d)(2),
        respectively, shall not exceed Twenty-Five Million Dollars ($25,000,000)
        individually or in the aggregate (the “Indemnity Cap”).
  (f)  The
        expiration or termination of any covenant, representation, warranty or agreement
        under this Agreement shall not affect the Parties’ obligations under this
        Section if the Indemnitee provided the Indemnifying Party with proper notice
        of
        the claim or event for which indemnification is sought prior to such expiration
        or termination.
  (g)  Except
        to
        the extent otherwise provided herein, the rights and remedies of the Parties
        under this Article 8 are exclusive and in lieu of any and all other rights
        and
        remedies which the Parties may have under this Agreement or otherwise for
        monetary relief, with respect to (i) any breach of or failure to perform
        any
        covenant, agreement, or representation or warranty set forth in this Agreement,
        or (ii) the Assumed Liabilities or the Excluded Liabilities, as the case
        may be.
        The indemnification obligations of the Parties set forth in this Article
        8 apply
        only to matters arising out of this Agreement and the Related
        Agreements.
  (h)  Notwithstanding
        anything to the contrary herein, no Party (including an Indemnitee) shall
        be
        entitled to recover from any other Party (including an Indemnifying Party)
        for
        any Indemnifiable Losses under this Agreement any amount in excess of the
        actual
        compensatory damages, court costs and reasonable attorney’s and other advisor
        fees suffered by
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 such
        Party. Purchaser, Seller and TOPIII waive any right to recover from any other
        Party punitive, incidental, special, exemplary and consequential damages
        arising
        in connection with or with respect to this Agreement or the Related Agreements.
        The provisions of this Section 8.1(h) shall not apply to indemnification
        for a
        Third Party Claim.
  8.2  Defense
        of Claims .
  (a)  If
        any
        Indemnitee receives notice of the assertion or commencement of any Third
        Party
        Claim with respect to which indemnification is to be sought from an Indemnifying
        Party, the Indemnitee shall give such Indemnifying Party prompt written notice
        thereof, but in any event such notice shall not be given later than five
        (5)
        calendar days after the Indemnitee’s receipt of notice of such Third Party
        Claim. Such notice shall describe the nature of the Third Party Claim in
        reasonable detail and shall indicate the estimated amount, if practicable,
        of
        the Indemnifiable Loss that has been or may be sustained by the Indemnitee.
        The
        Indemnifying Party will have the right to participate in or, by giving written
        notice to the Indemnitee, to elect to assume the defense of any Third Party
        Claim at such Indemnifying Party’s expense and by such Indemnifying Party’s own
        counsel, provided that the counsel for the Indemnifying Party who shall conduct
        the defense of such Third Party Claim shall be reasonably satisfactory to
        the
        Indemnitee. The Indemnifying Party shall have full and complete control over
        the
        conduct of such proceeding on behalf of the Indemnitee and shall, in its
        sole
        discretion, have the right to decide all matters of procedure, strategy,
        substance and settlement relating to such proceeding. The Indemnitee shall
        cooperate in good faith in such defense at such Indemnitee’s own
        expense.
  (b)  If,
        within five (5) calendar days after an Indemnitee provides written notice
        to the
        Indemnifying Party of any Third Party Claim, the Indemnitee receives written
        notice from the Indemnifying Party that such Indemnifying Party has elected
        to
        assume the defense of such Third Party Claim as provided in Section 8.2(a),
        the
        Indemnifying Party will not be liable for any legal expenses subsequently
        incurred by the Indemnitee in connection with the defense thereof; provided,
        however, that if the Indemnifying Party fails to take reasonable steps necessary
        to defend diligently such Third Party Claim within thirty (30) calendar days
        after receiving notice from the Indemnitee that the Indemnitee believes the
        Indemnifying Party has failed to take such steps, the Indemnitee may assume
        its
        own defense and the Indemnifying Party shall be liable for all reasonable
        expenses thereof.
  (1)  Without
        the prior written consent of the Indemnitee, the Indemnifying Party shall
        not
        enter into any settlement of any Third Party Claim which would lead to liability
        or create any financial or other obligation on the part of the Indemnitee
        for
        which the Indemnitee is not entitled to indemnification hereunder. If a firm
        offer is made to settle a Third Party Claim without leading to liability
        or the
        creation of a financial or other obligation on the part of the Indemnitee
        for
        which the Indemnitee is not entitled to indemnification hereunder and the
        Indemnifying Party desires to accept and agree to such offer, the Indemnifying
        party shall give written notice to the Indemnitee to that effect. If the
        Indemnitee fails to consent to such firm offer within five (5) calendar days
        after its receipt of such notice, the Indemnifying Party shall be relieved
        of
        its obligations to defend such Third Party Claim and the Indemnitee may contest
        or defend such Third Party Claim. In such event, the maximum liability of
        the
        Indemnifying Party as to such Third Party Claim will be the amount of such
        settlement offer.
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 (c)  The
        Indemnifying Party shall not, in the defense of any claim or litigation,
        except
        with the consent of the Indemnitee (which consent shall not be unreasonably
        withheld or delayed), consent to entry of judgment or enter into any settlement
        that provides for injunctive or other non-monetary relief affecting the
        Indemnitee.
  (d)  Any
        claim
        by an Indemnitee on account of an Indemnifiable Loss which does not result
        from
        a Third Party Claim (a “Direct Claim”) shall be asserted by giving the
        Indemnifying Party prompt written notice thereof, stating the nature of such
        claim in reasonable detail and indicating the estimated amount, if practicable,
        but in any event such notice shall not be given later than five (5) calendar
        days after the Indemnitee becomes aware of such Direct Claim, and the
        Indemnifying Party shall have a period of twenty (20) calendar days within
        which
        to respond to such Direct Claim. If the Indemnifying Party does not respond
        within such twenty (20) calendar day period, the Indemnitee shall issue a
        second
        notice to the Indemnifying Party and the Indemnifying Party shall have a
        period
        of ten (10) calendar days within which to respond to such second notice.
        If the
        Indemnifying Party does not respond to the second notice within ten (10)
        calendar days, then the Indemnifying Party shall be deemed to have accepted
        such
        claim. If the Indemnifying Party rejects such claim, the Indemnitee will
        be free
        to seek enforcement of its right to indemnification under this
        Agreement.
  (e)  If
        the
        amount of any Indemnifiable Loss, at any time subsequent to the making of
        an
        indemnity payment in respect thereof, is reduced by recovery, settlement
        or
        otherwise under or pursuant to any insurance coverage, or pursuant to any
        claim,
        recovery, settlement or payment by, from or against any other entity, the
        amount
        of such reduction, less any costs, expenses or premiums incurred in connection
        therewith (together with interest thereon from the date of payment thereof
        at
        the publicly announced Prime Rate shall promptly be repaid by the Indemnitee
        to
        the Indemnifying Party.
  (f)  A
        failure
        to give timely notice as provided in this Section 8.2 shall not affect the
        rights or obligations of any Party hereunder expect if, and only to the extent
        that, as a result of such failure, the Party which was entitled to receive
        such
        notice was actually prejudiced as a result of such failure.
  ARTICLE
        IX
  MISCELLANEOUS
        AGREEMENTS AND ACKNOWLEDGMENTS
  9.1  Survival
        of Representations and Warranties .
  (a)  Except
        as
        provided in subsection (b) below or otherwise provided in this Agreement,
        each
        representation and warranty contained in this Agreement shall survive the
        Closing Date and delivery of the Special Warranty Deed and Assignment for
        a
        period of eighteen months from and after the Closing Date.
  (b)  Notwithstanding
        subsection (a) above:
  (1)  the
        representations and warranties set forth in Sections 3.1 “Transaction
        Representations,” 3.14 “Mechanics’ Liens,” 3.15 “Title to the Assets” (except as
        described below in Section 9.1(b)(4)), 3.17 “Real Property Interests” and
        Section 4.1 “Transaction Representations” shall survive the Closing Date without
        time limitation;
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 (2)  a
        Party’s
        right to bring claims or actions relating to the representations and warranties
        set forth in Section 3.5 “Environmental Matters” or relating to Seller-Caused
        Environmental Conditions or Purchaser-Caused Environmental Conditions shall
        survive for a period of five (5) years from and after the Closing
        Date;
  (3)  a
        Party’s
        right to bring claims or actions relating to Section 5.6 “Taxes, Prorations and
        Closing Costs” shall survive the Closing Date for the applicable statute of
        limitations period (including any extensions thereof granted by the taxpayer
        or
        the taxing authority); and
  (4)  the
        representations and warranties set forth in the last two sentences of Section
        3.15 “Title to the Assets” shall not survive the Closing Date.
  9.2  Bulk
        Sales .
        The
        Parties acknowledge that Article 6 of the Uniform Commercial Code as enacted
        in
        the State of Texas (as successor to the Texas Bulk Sales Act) has been repealed
        and is not applicable to the transactions contemplated by this
        Agreement.
  9.3  Expenses .
        Except
        as otherwise provided herein, each Party is responsible for its own costs
        and
        expenses (including attorneys’ and consultants’ fees, costs and expenses)
        incurred in connection with this Agreement and the consummation of the
        transactions contemplated by this Agreement. Notwithstanding anything to
        the
        contrary, in any dispute among Purchaser, Seller and TOPIII (whether or not
        the
        subject of indemnification under Article 8), the prevailing Party or Parties
        shall be entitled to recover from any other Party or Parties their reasonable
        and necessary costs and expenses, including reasonable attorneys’ fees, incurred
        in the resolution of such dispute.
  9.4  Entire
        Document .
        This
        Agreement (including the Exhibits and Schedules to this Agreement) and the
        Related Agreements contain the entire agreement between the Parties with
        respect
        to the transactions contemplated hereby, and supersede all negotiations,
        representations, warranties, commitments, offers, contracts and writings
        (except
        for the Confidentiality Agreement) prior to the Effective Date of this
        Agreement, written or oral. No waiver and no modification or amendment of
        any
        provision of this Agreement is effective unless made in writing and duly
        signed
        by the Parties referring specifically to this Agreement, and then only to
        the
        specific purpose, extent and interest so provided.
  9.5  Schedules .
        The
        Schedules delivered pursuant to the terms of this Agreement are an integral
        part
        of this Agreement to the same extent as if they were set forth verbatim herein.
        Each schedule shall be self-contained; that is, no material on any one schedule
        shall be deemed to be incorporated into any other schedule unless it is done
        so
        explicitly in each schedule in which it is deemed to appear.
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 9.6  Counterparts,
        Facsimile Signatures .
        This
        Agreement may be executed in one or more counterparts and by facsimile, each
        of
        which shall be deemed an original, but all together shall constitute one
        and the
        same instrument for all purposes.
  9.7  Severability .
        If any
        provision hereof is held invalid or unenforceable by any Governmental Authority,
        such holding or action will be strictly construed and will not affect the
        validity or effect of any other provision hereof. To the extent permitted
        by
        law, the Parties waive, to the maximum extent permissible, any provision
        of law
        that renders any provision hereof prohibited or unenforceable in any
        respect.
  9.8  Assignability .
        This
        Agreement is binding upon and inures to the benefit of the successors and
        assigns of the Parties, but is not assignable by any Party without the prior
        written consent of the other Party, which consent will not be unreasonably
        withheld. Any such assignment is conditioned on the assignee’s agreement in
        writing to assume the assigning Party’s duties and obligations under this
        Agreement and the Related Agreements. Any assignment effected in accordance
        with
        this Section 9.8 “Assignability” will not relieve the assigning Party of its
        obligations and liabilities under this Agreement and the Related Agreements
        (unless agreed to by the non-assigning Party), including all obligations
        under
        this Agreement or the Related Agreements arising on or after the assignment
        to
        such assignee.
  9.9  Captions .
        The
        captions of the various Articles, Sections, Exhibits and Schedules of this
        Agreement have been inserted only for convenience of reference and do not
        modify, explain, enlarge or restrict any of the provisions of this
        Agreement.
  9.10  Governing
        Law .
        The
        validity, interpretation and effect of this Agreement are governed by and
        will
        be construed in accordance with the laws of the State of New York applicable
        to
        contracts made and performed in such State and without regard to conflicts
        of
        law doctrines except Section 5-1401 of the New York General Obligations Law
        and
        except to the extent that certain matters are preempted by Federal law or
        are
        governed by the law of the jurisdiction of organization of the respective
        Parties.
  9.11  Choice
        of Forum .
        The
        Parties hereto agree that should any suit, action or proceeding arising out
        of
        this Agreement be instituted by any Party hereto (other than a suit, action
        or
        proceeding to enforce or realize upon any final court judgment arising out
        of
        this Agreement), such suit, action or proceeding shall be instituted only
        in a
        state or federal court sitting in the Southern District of New York. Each
        of the
        Parties hereto consents to the in personam jurisdiction of any state or federal
        court sitting in the Southern District of New York and waives any objection
        to
        the venue of any such suit, action or proceeding. The Parties hereto recognize
        that courts outside the Southern District of New York may also have jurisdiction
        over suits, actions or proceedings arising out of this Agreement, and in
        the
        event that any Party hereto shall institute a proceeding involving this
        Agreement in a jurisdiction outside the Southern District of New York, the
        Party
        instituting such proceeding shall indemnify any other party hereto for any
        losses and expenses that may result from the breach of the foregoing covenant
        to
        institute such proceeding only in a state or federal court in the Southern
        District of New York, including without limitation any additional expenses
        incurred as a result of litigating in another jurisdiction, such as reasonable
        fees and expenses of local counsel and travel and lodging expenses for Parties,
        witnesses, experts and support personnel. Each of the Parties shall appoint
        and
        maintain an agent for service of process in the State of New York.
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 9.12  Notices .
        All
        notices, requests, demands and other communications under this Agreement
        must be
        in writing and must be delivered in person or by facsimile, certified mail,
        postage prepaid, or overnight delivery, and properly addressed as
        follows:
  If
                  to Seller, TOPIII or Seller’s Parent:
              Twin
                  Oaks Power, LP
                c/o
                  Sempra Energy Resources
                101
                  Ash Street
                San
                  Diego, California 92101
                Attention:
                  Reuben Rosen, Esq.
                Fax:
                  (619) 696-4443With
                  a copy to:
              Cleary
                  Gottlieb Steen & Hamilton LLP
                One
                  Liberty Plaza
                New
                  York, New York 10006
                Attention:
                  Richard J. Cooper, Esq.
                Fax:
                  (212) 225-3999If
                  to Purchaser or Purchaser’s Parent:
              PNM
                  Resources
                Alvarado
                  Square
                Albuquerque,
                  New Mexico 87158-2802
                Attention:
                  Hugh Smith
                Fax:
                  (505) 241-2819With
                  a copy to:
              Troutman
                  Sanders LLP
                401
                  9thStreet, N.W.
                Suite
                  1000
                Washington,
                  D.C. 20004-2134
                Attention:
                  Ronald R. Ross, Esq.
                Fax:
                  (202)
                  654-5625
 
 Any
        Party
        may from time to time change its address for the purpose of notices to that
        Party by a similar notice specifying a new address, but no such change is
        effective until it is actually received by the Party sought to be charged
        with
        its contents.
  All
        notices and other communications required or permitted under this Agreement
        which are addressed as provided in this Section 9.12 “Notices” are effective
        upon delivery, if delivered personally or by overnight mail, and, are effective
        five (5) days following deposit in the United States mail, postage prepaid
        if
        delivered by mail.
  9.13  Time
        is of the Essence .
        Time is
        of the essence of each term of this Agreement. Without limiting the generality
        of the foregoing, all times provided for in this Agreement for the performance
        of any act will be strictly construed.
  9.14  Termination .
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 (a)  Rights
        To Terminate .
        This
        Agreement may, by written notice given on or prior to the Closing Date, in
        the
        manner provided in Section 9.12 “Notices,” be terminated at any time prior to
        the Closing Date:
  (1)  by
        Seller, TOPIII or Purchaser if (A) any Governmental Authority shall have
        issued
        an Order, judgment or decree permanently restraining, enjoining or otherwise
        prohibiting the Closing, and such Order, judgment or decree shall have become
        final and appealable or (B) any statute, rule, Order or regulation shall
        have
        been enacted or issued by any Governmental Authority which, directly or
        indirectly, prohibits the consummation of the Closing;
  (2)  by
        Seller
        or TOPIII if there has been a material misrepresentation as of the Effective
        Date with respect to any of Purchaser’s representations and warranties in this
        Agreement or a material default or breach by Purchaser with respect to the
        due
        and timely performance of any of Purchaser’s covenants and agreements contained
        in this Agreement or in any Related Agreement, which misrepresentation, default
        or breach, either individually or in the aggregate, has had, or is reasonably
        likely to have, a Material Adverse Effect, and such misrepresentation, default
        or breach is not cured or waived in writing by the earlier of the Closing
        Date
        or the date ten (10) days after receipt by Purchaser of written notice
        specifying particularly such misrepresentation, default or breach;
  (3)  by
        Purchaser if there has been a material misrepresentation as of the Effective
        Date with respect to Seller’s or TOPIII’s representations and warranties in this
        Agreement or a material default or breach by Seller or TOPIII with respect
        to
        the due and timely performance of any of Seller’s or TOPIII’s covenants and
        agreements contained in this Agreement or in any Related Agreement, which
        misrepresentation, default or breach, either individually or in the aggregate,
        has had, or is reasonably likely to have, a Material Adverse Effect, and
        such
        misrepresentation, default or breach is not cured or waived in writing by
        the
        earlier of the Closing Date or the date ten (10) days after receipt by Seller
        or
        TOPIII of written notice specifying particularly such misrepresentation,
        default
        or breach;
  (4)  by
        mutual
        agreement of Seller, TOPIII and Purchaser;
  (5)  by
        Seller, TOPIII or Purchaser if the Closing has not occurred on or before
        June
        16, 2006 because any condition precedent set forth in Article 6 or Article
        7 has
        not been waived or satisfied (but with respect to the conditions relating
        to the
        deliverables set forth in Sections 6.6, 6.7, 7.6, 7.11, in clauses (a) and
        (c)
        through (j) of Schedule 6.8 “Closing Deliveries By Seller and TOPIII,” and in
        clauses (a) through (g), (i) and of Schedule 7.8 “Closing Deliveries By
        Purchaser,” such conditions are capable of being satisfied by delivery of the
        applicable agreement, certificate, document or opinion if the Closing were
        to
        have occurred on June 16, 2006); provided that the right to terminate this
        Agreement under this Section 9.14(a)(5) shall not be available to any Party
        whose failure to fulfill any obligation under this Agreement has been the
        direct
        cause of, or directly resulted in, the failure to satisfy the relevant condition
        precedent on or before June 16, 2006;
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 (6)  by
        Purchaser, in the event that the Parties are unable, after good faith efforts,
        to reach a mutual agreement on the Purchase Price reduction contemplated
        by
        Section 5.3(e)(2) within ten (10) Business Days of the settlement described
        in
        Section 5.3(e)(2); provided that Purchaser shall only have the right to
        terminate this Agreement pursuant to this Section 9.14(a)(6) within the ten
        (10)
        Business Day period after the ten (10) Business Day period provided for
        negotiation of a Purchase Price reduction pursuant to Section
        5.3(e)(2);
  (7)  except
        as
        otherwise provided in this Agreement, by Purchaser if any Seller’s Required
        Consents and TOPIII’s Required Consents, the receipt of which is a condition to
        the obligation of Purchaser to consummate the Closing, shall not have been
        obtained or shall have been obtained but in form and substance not reasonably
        satisfactory to Purchaser; provided that the right to terminate this Agreement
        under this Section 9.14(a)(7) shall not be available to Purchaser unless
        Purchaser shall have satisfied its obligations with respect to credit support
        pursuant to Section 5.3(e)(1) and Purchaser’s Parent has satisfied its
        obligations with respect to guaranties and credit support pursuant to Section
        5.20. Notwithstanding the foregoing, in the event that the Fuel Agreement
        has
        been terminated as a result of the Disputes, this termination right shall
        not
        apply to the Fuel Agreement;
  (8)  by
        Seller
        or TOPIII, if any of Seller’s Required Consents or TOPIII’s Required Consents,
        the receipt of which is a condition to the obligation of Seller or TOPIII
        to
        consummate the Closing, shall have been denied; or
  (9)  by
        Purchaser if there shall have occurred a Material Adverse Effect.
  (b)  Effect
        of Termination .
        In the
        event of termination of this Agreement by any of the Parties pursuant to
        Section
        9.14(a), written notice thereof shall forthwith be given by the terminating
        Party to the other Party. If this Agreement is terminated pursuant to Section
        9.14(a) for any reason, the rights, obligations and liabilities of the Parties
        to each other under this Agreement and the Related Agreements will terminate
        and
        thereafter no Party shall have any recourse against the other by reason of
        this
        Agreement, other than (i) for the obligations set forth in Sections 3.8
“Brokers,” 4.3 “Brokers,” 5.4 “Confidentiality,” and Article 9 “Miscellaneous
        Agreements and Acknowledgments;” (ii) for the obligations of the Parties set
        forth in the Confidentiality Agreement and (iii) for liabilities or losses
        resulting from or arising out of a breach of this Agreement prior to such
        termination. Upon termination, the originals of any items, documents or written
        materials provided by one Party to the other Party will be returned by the
        receiving Party to the providing Party, and any Confidential Information
        retained by the receiving Party will be kept confidential.
  9.15  [ Reserved ].
  9.16  No
        Third Party Beneficiaries .
        Except
        as may be specifically set forth in this Agreement, nothing in this Agreement,
        whether express or implied, is intended to confer any rights or remedies
        under
        or by reason of this Agreement on any Persons other than the Parties and
        their
        respective permitted successors and assigns, nor is anything in this Agreement
        intended to relieve or discharge the obligation or liability of any Third
        Parties to any Party, nor give any Third Parties any right of subrogation
        or
        action against any Party.
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 9.17  No
        Joint Venture .
        Nothing
        contained in this Agreement creates or is intended to create an association,
        trust, partnership, or joint venture or impose a trust or partnership duty,
        obligation, or liability on or with regard to any Party.
  9.18  Construction
        of Agreement .
        Ambiguities or uncertainties in the wording of this Agreement will not be
        construed for or against any Party, but will be construed in the manner that
        most accurately reflects the Parties’ agreement as of the Effective
        Date.
  9.19  Conflicts .
        In the
        event of any conflicts or inconsistencies between the terms of this Agreement
        and the terms of any of the Related Agreements, the terms of this Agreement
        will
        govern and prevail.
  9.20  Effect
        of Closing Over Known Unsatisfied Conditions or Breached Representations,
        Warranties or Covenants .
        If
        Seller, TOPIII or Purchaser elects to proceed with the Closing with Knowledge
        that any closing condition in its favor has not been satisfied or with Knowledge
        of a breach of any representation, warranty or covenant by the other Party,
        the
        closing condition that is unsatisfied or the representation, warranty or
        covenant which is breached as of the Closing Date will be deemed waived by
        such
        Party, and absent a written waiver, the terms of which shall govern, such
        Party
        will be deemed to fully release and forever discharge the other Party on
        account
        of any and all claims, demands or charges, known or unknown, with respect
        to the
        same.
  9.21  CONSENT
        TO JURISDICTION .
        EACH OF
        SELLER, TOPIII AND PURCHASER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
        ANY
        LOCAL, STATE OR FEDERAL COURT LOCATED IN THE SOUTHERN DISTRICT OF NEW YORK
        OR
        ADJUDICATION OF A PRELIMINARY INJUNCTION OR OTHER PROVISIONAL JUDICIAL REMEDY.
        EACH OF SELLER, TOPIII AND PURCHASER ACCEPTS FOR ITSELF AND IN CONNECTION
        WITH
        ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION
        OF
        THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH
        OF THE
        PARTIES SHALL APPOINT AND MAINTAIN AN AGENT FOR SERVICE OF PROCESS IN THE
        STATE
        OF NEW YORK.
  *
        * * *
        *
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   IN
        WITNESS WHEREOF, the Parties have executed this Agreement as of the date
        first
        written above.


SELLER:




TWIN
      OAKS
      POWER, LP, a Texas limited partnership




By: SETOP
      I, LLC, a Delaware limited liability company, its general partner




By:
      __ /s/
      Michael R. Niggli _____________


Name:
      Michael R. Niggli


Title:
      President




TOPIII:




TWIN
      OAKS
      POWER III, LP, a Texas limited partnership




By: SETOP
      III, LLC, a Delaware limited liability company, its general partner




By:
      __ /s/
      Michael R. Niggli _____________


Name:
      Michael R. Niggli


Title:
      President




For
      purposes of Section 5.22, Article 3, Article 8 and Article 9 only:




SELLER’S
      PARENT:




SEMPRA
      ENERGY, a California corporation




By:
      __ /s/
      Charles A. McMonagle _________


Name:
      Charles A. McMonagle


Title:
      Vice President & Treasurer




By:
      __ /s/
      Mark Snell ___________________


Name:
      Mark Snell


Title:
      Executive Vice President & CFO




Table
          of Contents






PURCHASER:




ALTURA
      POWER L.P., a Texas limited partnership




By: ALTURA
      POWER GP, LLC, a Delaware limited liability company, its general
      partner




By:
      __ /s/
      Wendy Carlson ______________


Name:
      Wendy Carlson


Title:
      Treasurer




For
      purposes of Section 5.3(b), Section 5.20, Section 5.21, Article 4, Article
      8 and
      Article 9 only:




PURCHASER’S
      PARENT:




PNM
      RESOURCES, INC., a New Mexico corporation




By:
      __ /s/
      Hugh W. Smith _______________


Name:
      Hugh W. Smith


Title:
      Senior Vice President, Energy Resources